Gold had a couple of pretty strong reversals yesterday and today. Recall we saw a rising wedge and bearish butterfly pattern completed on the daily chart that indicated GC might have run out of steam [original post here].
Since then, it blew through the proposed D point of 1646.80 on the way to 1684.90. But, this morning, it fell sharply, tagging 1642.20 intra-day. It’s also set up some striking divergence on the 60-minute chart.
I have no idea what the cosmos has in store for gold long-term. But, this pattern is a recipe for at least a short-term correction. It is likely falling in sympathy to the equities markets, but all those nasty margin calls have to paid somehow. And, it’s psychologically easier to sell positions in which you have huge gains.
Given that many of my fellow doomers have defensive positions in gold, it’s worth at least taking a look at protection.
Charts from original post: AUG 2, 2011