Gold Blasts Through All Major Support Lines

COMEX:GC1!   Gold Futures
Good Evening Traders!

I've been calling for the bottom of the current cycle and last night I pointed out that there was major support below my current Gold             short @ 1305. There was the upward trend line dating back from January, the channel bottom from July 1, and the bottom BB Band (2.0 Std Dev), all sitting right at 1305. This was also confirmed by a Stoch RSI that was about to break below 20, signalling the possible end of this latest downward cycle. I went to bed last night confident that my final profit target of 1305 would be hit in the morning, ending my latest short that started at 1331.

Well, boy did I have a surprise when I woke up in the morning! I mean, price didn't even hesitate at the 1305 level. It blasted right through 1305, 1300 and there was no stopping it. If you look at any shorter time frame, you will see that this move down was dramatic and without any real pause or pullback.

In my post last night, I stated that the Stoch RSI is not a binary indicator. This means that just because it is oversold or overbought, doesn't mean that the cycle is over. The indicator can stay in these oversold/bought conditions for quite a some time. Look at the chart below. I've called out the period in late August when the Stoch RSI stayed oversold for over a week while price continued to move down.

If you're thinking of going long, I'd recommend waiting for the Stoch RSI green line to break above the 20 level and cross over the magenta line. If you want to go short, you can wait for a pullback. The bottom BB is at 1283. That could be a good entry point. That is, if price retraces that much.

Trade Safe and Protect Your Profits!

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