Gold broke beneath the neckline today, or our previous 2nd tier uptrend line, and is collapsing down towards our new 2nd tier uptrend line. Though the EUR/USD’s neckline is intact, gold’s fundamental move could be warning us of a sizable appreciation in the Dollar coupled with a pullback in U. S. equities and crude due to present positive correlations. There is always the possibility of a head-fake.
However, it does appear today’s movement in gold is a fundamental one. On an encouraging note, the pullback isn’t registering substantial volume, meaning our new 2nd tier uptrend line may hold for the time being should volume continue to decline. We were warning of near-term downward pressure in gold, and it finally hit. Fortunately for bulls, gold has built up several safety nets over the first half of the year during past periods of consolidation. Therefore, it will take more than today’s pullback to counter the medium-term uptrend in place.
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