CME announced the gold margin raise one week ago which had little effect on the parabolic price move, except as shown by the long shadow of the candle one week ago, with gold topping intraweek last week at about 1817. Following silver as an example, more margin raises are anticipated with each spanking gold price down as they occur.
Independent of the margin raises, from a purley technical chart basis, gold is forming an M Top. Of interest is that as of a week ago, the indicators were all negatively diverged and a spankdown would be expected for price with gold placing a significant top. Sometimes divergences are divergences, until they aren't. Note the small red circles for the indicators. The RSI, MACD and histogram all managed to eek out a higher high, due to the momo of the parabolic move, indicating that they now want to see price come back up for a matching or higher high, before it rolls over. Note the red lines for stochastics and money flow that firmly show they want to see lower and lower gold prices for the weeks and months ahead.
Thus, to satisfy the red circles, price will come back up to 1800-1830 to place its final top. When that occurs, the indicators with the red circles above will post lower highs, thus, the chart will be in universal agreement again with negative divergence across all the indicators, and the gold spank down can begin in earnest. Note the gaps below that require filling; they look like swiss cheese since the move up was so dramatic the last couple years. The 65 week MA line is a magnet for price, sometimes it takes months or years for price to come back home again, but like returning for Mom's home cookin', price will come back to the 65 week MA as time moves along, and, considering an overshoot to the downside, this target is 1300-1450. Note that in late 2009 price reached an exaggerated 300 dollar premium over the 65 week MA before retreating. Price is now 400 bucks over the 65 week MA!!
Projection is an M Top forming now. This is a significant top for gold that is occurring. Within the month, the final print higher will be placed and gold will venture lower over the intermediate and longer term, for the weeks and months ahead. The alternate outcome is that another margin raise occurs at anytime and price will simply collapse more quickly.
For gold charts use search box above for keystone speculator or view at stockcharts public charts list keystone speculator.
Although I absolutely agree with the conclusions, I tend to believe the market as a whole are in a period which does not fit within any chart. With regard to gold, you actually have people out there that believe that if they buy some sort of gold ETF they are protecting themselves from the Armageddon which is on its way. The whole notion is ridiculous. Does anyone really believe that the holder of the physical property is going to deliver on the underlying derivative contracts in the event of such a huge cataclysm? If such an event happens, the holder will default, the contracts will become worthless and the ETF will become worthless.
CME raises gold margin requirements and the price move off the top days ago was the result. Using the silver spank down in April as an example, additional raises in margin requirements should be on tap, spanking down price as they occur.
On a technical basis, studying the red circles, note how the RSI, MACD and histogram all placed higher highs, thus, they want to see price come back up for a matching or higher high before rolling over. And that is exactly what is currently happening. The blue circle will target the price top for gold that should be a significant top for gold perhaps not seen again for very long time. Once the blue circle is achieved, that gives a higher high in price over the last couple weeks which corresponds to negative divergence across the board for all indicators (blue lines). She's going to go down.
Note the volume participation over the last two weeks. High volume as the momo parabolic shot skyward like a rocket, but now, as price ventures back up to satisfy the red circles, the volume is half. The institutions and hedgies are bailing while the hype remains strong for gold. Joe Sucka rolls in at this stage and serves as the bag holder. Projection is down from here as the top is placed in the blue circle, call it anywhere between 1800-1830. This M Top is significant and this chart is nothing you want to own long. Projection is for a spankdown as soon as the blue circle is achieved. Alternate projection is a collapse of price at any time if CME announces the next raise in gold margin requirements.
For gold charts use search box above for keystone speculator.