27 Dec 11 - Gold - Weekly and Daily Charts signalling a possible top and impending correction?

The year of 2011 has about to come to an end and very soon we will be welcoming 2012. It will be a challenging 2012 ahead and I was just reading some news on some commentators saying that it might a be good time to buy on Gold since price has moved down quite from its all time high of 1920, but it is true? As for now, from the charts are telling me in the long term, I would be hesitant to go in long for now, but if certain levels hold, then that will be my consideration to go long.

Monthly Chart

As seen in the attached chart, Gold has been trending up for the past few years and having hit a peak at 1920, there were some interesting signals seen at this high. Following the high, there was a possible resistance seen here as price candle for Sep 2011 showed a Bearish Engulfing candlestck pattern. Following this, the price action has been trending lower. It might soon test the rising trendline and with a successful break of this trendline, I will definitely be staying away from a long position.

In addition, what is interesting to note is that the RSI divergence shouting out loud. There was a very clear divergence seen on Gold which is telling us that there is an internal weakening for now and a possible downward move seems really possible.

Weekly Chart

Zooming down to the weekly chart, it is clearly evident that we are currently in a short downward move for Gold as it has already violated a short term rising trendline and it seems to be moving down to test the longer term rising trendline.

In addition, the RSI has already moved below the 50 level which is indicating that Gold is currently trending down.

Daily Chart

This is where the picture becomes clearer and from here, there is a key level for Gold which will dictate the move for Gold in 2012.

As seen in the attached chart, following the high of 1920, Gold has been trending down and how do we tell that? Well, following the high, Gold has made a low and a new lower high. The downtrend will be further confirmed when a new lower low is made which brings the support level at 1532.35 to 1564.16 the key levels to watch out for. If Gold prices hold at this region, this is where I may consider a long position.

Having looking through these charts, I will ignore the rumours and not even bother about a long since there are currently no setups for a long anyway. Well, it all remains to be seen.