Old Resistance Becomes New Support

Gold stocks had a rough day today. In fact, the XAU was down almost 5% intraday, and the gold ETFs did not do any better. This post will be about assessing the damage, and trying to figure out what's next, but first let's look at a previous post.

Last Friday, I said, "To be more specific, I feel that the XAU chart will likely top out on Monday, July 23." Below is a chart of the XAU, and I have drawn a dashed line connecting July 23 to the exact top of the market.


What's more important is what is going to happen next. If you look at the above chart, you will see that the XAU has closed right on its old resistance line. This is an encouraging sign, however, it is not a strong enough piece of evidence to indicate a reversal.

At this point, I can't really say what is going to happen next. Personally, I closed my short positions today, and I'm just going wait in cash until I get a better idea of what's going to happen. I'll have to examine the charts for a least a couple of hours tonight, and as I come to any firmer conclusions, I will post them on this blog.

At the very least, I can say that the long term signals that the weekly and monthly charts generated are still valid, and the charts so far have not sustained any long term damage. This means, that if you are not a day trader, this may be a good time to dollar cost average. In any bull market, it never hurts to buy on dips.

Anyway, stay tuned for a more in depth look tomorrow. Thanks again for visiting my site.