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Chartwhiz Daily Gold Report
By Jeremy Ascher   
January 21, 2011

Feb Gold: Gold prices logged a distribution day on Thursday as they plunged $23.70 to close at 13465, the lowest daily settlement since Nov. 17, 2010. The market appears to be in the midst of a sustainable downtrend after confirming a Head and Shoulders top that developed over the last few months. The current trend is down for 15-days since peaking at 14244 this year and has a near term objective at 13150 expected to be seen next week. The projected target for this pattern is at 12545, though the 200 DMA at 12800 will be come into play first. These targets will be met as this trend unfolds over the next few weeks/months. Based on current chart patterns, closes above 13930 (Jan 13 swing high) would negate the Bearish outlook.

For today, Jan 21, the daily outlook is Bearish with a sell rallies approach suggested. We will be looking for the most recent prior lows to offer Resistance at 13500-13545 X (Daily Pivot/100 DMA/Last week’s low). A rejection of this range calls for further downside today with a drop below 13400 setting sights on 13345 XX Support (lower 3-day channel) and 13278-13255 XXX Support levels (Nov Lows). A breach of 13255 clears the way to achieve the initial H&S target at 13175-13150 XXXX extension target. Should the market trade above 13545 today, take a more cautious approach, shorting upper 13600-13615 XX and 13655 XXX Resistance zones initially as a scalp trade.

On the upside, the only indications for buying on a short term basis only, is if the market holds 13400 leaving trade contained within yesterday’s range (inside day). In that scenario, buyers can lightly scalp against 13435-13400 X Support range while initially targeting 13500-13545 X Pivot Resistance. A press above 13545 indicates Longs should trail Stops to 13490 in an attempt to catch a short covering wave to 13600-13615 XX (key weekly trends) and 13655 XXX (3-day downtrend).

Daily Gold Playbook:

01/21/11
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Daily Gold Chart:

01/21/11
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