Prepared by Jamie Saettele, CMT
The 3 wave rally from the September low is viewed as a correction of the decline from the record high and should be completely retraced. A look at the long term picture reveals that gold remains above long term trendlines but some of those lines are well below the current level. Even a test of the trendline that has defined price since the summer 2010 lows would result in a test of the mid 1500s (52 week average in the vicinity). A drop similar in amplitude to the one that occurred in September would reach the low 1400s. If gold has entered a larger bear market, then price needs to stay below the September-November trendline. Confidence in the downside is increased as gold has broken trendline support, and held trendline resistance.