The Most Important Chart for Gold
Friday October 4, 2013 11:00 AM
(Kitco News) - Legendary commodity trader and market analyst W.D. Gann said his most important charts for market analysis and trading were the weekly charts. Reason: They give an important bigger-picture view of where market prices have been and where they may be going--but not so big (as the monthly charts) to not give some near-term trading signals. Indeed, history shows that market prices tend to gravitate toward historical highs and lows when significant, trending price moves are under way.
In the early- to mid-1900s Gann was a successful commodity trader who authored several books on technical analysis and trading psychology. One of my favorite Gann books is "How to Make Profits in Commodities" and it's known for its bright orange cover. I've read it several times.
See on the weekly continuation chart for nearby COMEX gold futures that there are downtrend lines in place. This suggests the gold market bears remain in overall technical command on a longer-term chart basis, and that the path of least resistance for gold prices will remain sideways to lower until at least one of the downtrend lines is broken.
See the important technical support and resistance lines on the chart. A push in nearby gold futures prices above the strong chart resistance level at the $1,434.00 level would provide the bulls with solid upside technical strength to suggest prices can sustain a longer-term uptrend. A drop in prices below firm technical support at the 2013 low of $1,179.40 would give the gold market bears additional downside technical power to suggest a challenge of major psychological support at the $1,000.00-an-ounce level.
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By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com