Be prepared for another "bull wave" (2010-03-06 DJI Gold analysis)

Just a brief summary, GBP returned to above 1.51 after its great drop to 1.478 last week. With the satisfaction to the policies made by Greek Government about increasing tax to reduce deficit, EUR stopped its sharp drop and became more stable. Now the currencies seem to be calm down for a while before any breaking news, and focus should be turned back to equities and commodities like Gold.

There was a good news to highlight, the surging Dow Jones yesterday led the price to break the unbreakable-for-three-trial line. Though it was only a small pass, together with the stablized unemployment rate and the better atmospher in the global markets, it is more likely for a bullish markets to begin. If it's really so, and DJI is confirmed to have successfully gone beyond the barrier, it is anticipated that Dow Jones would go as far as 10,900. This may bring Hang Seng Index further upwards.



We could often hear that when the market is falling, gold would always be a good shelter and with increasing demand, its price would rocket. So what would happen when DJI is expected to rocket instead? Looking at the below graph, we can see that there are at least 3 resistances. The upper downtrend line (in red), the 61.8%-fibonacci line (in thin dotted blue) and the barrier in thick blue dotted line. Given such many barriers, it is more likely that Gold price would hardly reach the highest point in three months and would remain more-or-less in the flat horizontal channel. Only really breaking news could lead to a volatile rise or drop for Gold.