The weekly price chart below shows the previous four weeks, where price kept knocking up against that blue channel line. The breakthrough opens up the potential for price to now challenge that upper momentum line. The only strong resistance remaining is the Red 13 moving average near the 35.50 area. Wednesday is the last trade day of the month and we want to see a close above the long term blue line in order to solidify that area as becoming support. It would not be unusual for price to re-test the blue line on a pullback. However, since price just spent 4 weeks testing the underneath of that line, price could keep right on moving higher here.
Our longer term accumulation point in 2011 was at the 27.55 area, and we've just took a short term position at 34.55 on Friday. So far year to date, we've picked up over $5 dollars in short term trade profits over the first six weeks of the year. The trend remains up.
GOLD VIEW:
Gold broke out to new highs last week and exceeded the key 1767 December price high. The key now for gold is to take out the 1804 price area. With this Wednesday the last day of the month, a close above 1767 would be another notch in the case that the correction for gold is over and new highs are coming. This current price area on the long term charts and channels is one of the two price points that could turn out to be high points for the year. The Green channel lines have been providing support and resistance since 2009 and the December low was an exact hit of that lower trend line.
The two most likely price points for a high in 2012 is the 1800-1868 area and the 2100-2200 area at the upper green channel line. Thus, anyone looking to lighten up, or sell inventory or scrap, this is an excellent price point to consider. The long term trends are all up, and this price point is one we need to pay attention to. If price can achieve a monthly close above 1868, the the upper line above 2000 will become the next target for a yearly high.
The US Dollar
It looks like the major announcements that came from the Fed last month are doing its job. It now looks like a major reversal back down is in the early stages of development in regards to this latest wave. We don’t want to jump the gun, but the chart looks vulnerable. From a long term perspective, the chart below shows the US dollar bounce was just enough to qualify it as a long term wave. The dollar retraced at its highest point 23% of what it has lost over the last 10 years.
Unless the US Dollar turns around and rallies hard next week, the February close is in danger of closing below the December lows. There’s a final Gann angle line that has not been broken yet and the 34 week moving average still requires the dollar to close below the 76 level, but the chart suggests the dollar is on the ropes at the moment. AAYESHATECH
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