When we last reviewed gold in November, it had dipped below an important level of support.
As we noted back then:
…a failure to retake the broken TL would indicate lower prices to come. [The channel placement] is tricky. In this case, I’ll give more credence to the upside if/when the red trend line of support (now resistance) is breached.
Wouldn’t you know…gold popped back above that red TL and is currently going strong. As noted before, I wouldn’t put too much credence in the placement of a very long-term channel like the white one below. But, the TL is clear. And, as long as prices stay north of 1180 or so, all is good.
The close-up shows the stronger case that could be made for a drop to the yellow .500 Fib level. But, TPTB apparently decided that would be bad for business (or under-collateralized ETF’s, depending on whether or not you trust the bankers.)
In the short-term, we could make an argument for a reversal here at the white .500 at 1302. It also represents a backtest of the yellow .382, the midline of the purple channel and the top of the iffy red channel.
But, the risk of a big plunge is — for now — greatly reduced by the bounce off that TL.