Our initial target at our October 16 sell signal on gold was $1,650 an ounce. The potential support there held for awhile, looking like gold might be building a base.
But our technical indicators remained on the sell signal, and gold has now broken to the downside from the symmetrical triangle formation within which it had been confined. As we have been noting the direction of such a breakout usually indicates the direction for awhile.
With the target of $1,650 having been reached and breached we told subscribers the next potential support is at $1,550, the level of its lows in December 2011, and June of last year.
[Related -Searching For Solid Support In The Face Of Global Headwinds]
Obviously many technicians were watching for the direction of the breakout from the triangle formation and jumped to the sell side with the breakout. Gold's plunge has accelerated.
But it is already approaching our next target. It is again short-term oversold beneath its 30-day m.a., which will probably bring some buying from those again trying to catch the bottom.
[Related -Long-term Relationships and Credit Scores]
We will just continue to follow our indicators and wait for their signal.
If the next potential support level does not hold, at some point it will have to be considered whether this is just a prolonged correction, or if gold's long bull market is coming to an end.