gold 9/10
It looks like the evening Chicago trade has broken through the key 615 barrier I've been watching. Friday's trade pierced it by trading as low as 613.50, but closed at 617.30, nearly $4 higher than the low. With evening trade currently in the 606.50 area, all the market needs is a close below 615.00 to continue the bearish enthusiasm. The daily chart shows a downside objective of 559.30 for the December contract on eCBOT. (Note: both charts are from ProphetX)
The weekly chart has a near-term bearish target in the 576 ballpark.
The recent thrust downward has been intense, so we may see the market take a breath in the near term. Psychological support at 600 may play a key role in determining whether the move has the stamina to get to the 580 or even 560 area.
posted by jared @ 8:00 PM
2 Comments:
Is the psychological support simply because it is $600 or are there other factors that play in.
Yes, there are certain price levels of significance in most markets. Psychological support or resistance is usually at some round number or at a historically important number that many traders have "in the back of their mind" as significant.
It's because of the collective expectations of the market that these price areas actually prove significant. Many times (not always) when one of these price areas is overtaken, there is a surge immediately following the breach - the surge can be due to stop loss orders placed just above or below the line of significance that result in an exaggerated move beyond that point. Or the surge can be because of buyers or sellers piling on because they believe the trend will continue or quickly reverse.
One thing about this that has become clear to me is this: the more the price movement "bumps up" against or challenges significant levels (either on the upside or downside) the more likely the market is to overcome that barrier.
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