Gold dropping to Golden ratio (2011-09-16 Gold analysis)

European Central Bank is giving out loans to banks to ease the credit crisis. With lower chances of default and liquidity is increased, all the US and European stock markets surged. German market boosted over 3% while S&P500 rose more than 1.72%.

Today Hong Kong market should be following this rally and Hang Seng Index would probably go up by 500-600 points.

Stock markets going up usually means that safe haven plunging. Let's see Gold.
















Above is the daily chart of Gold (XAU=). Gold price has been rising along the red up-trend line for a few months, and just broke this trend line.

On the chart, we can see that the red solid up-trend line was a pretty strong one which successfully stopped Gold price from slumping below.

However, yesterday there was a large black candlestick breaking down the trend line, showing that the medium term bullish strong trend has come to an end and probably gold would undergo bearish trend in short term.

By using Fibonacci retracement, next support can be found at around 1,750 (38.2% retracement).

Indeed, MACD is at a pretty high level. Normally if it is at low levels, we might expect there will be at least a short rebound of the price. But this time it fits my anticipation that Gold price is going to slump further.

Orange line is the short-term resistant to the price, and next resistant level is at around 1,800.

FOMC meeting next week would definitely bring in some news to the markets, but we are not sure whether it is good news or bad news. So I think its better for us to lower exposures.