Gold Spread Betting Analysis: Bear Run Remains Strong Despite Retracing From Lows
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On the morning of the 6th of September 2011 many gold spread betting investors would have woken up with a feeling of expectant excitement.
They were sure that this would be the day that gold broke through the $2,000 barrier and headed for untold heights. After all, the uncertainty that caused the latest bull run in gold was intact, with the Euro debt crisis still simmering like an evil brew.
This was not to be: the price opened at $1901.85, marginally higher than the previous day’s closing price, and briefly moved up to $1921 but then it started dropping and dropping some more.
At one point it was trading as low as $1859.85. When it finally closed at $1875.10 many of those who were long of gold heaved a sigh of relief.
The worst was yet to come and since then the commodity has done little but drop. The chart below shows that, on the 21st of September, the gold price entered the Ichimoku cloud and continued dropping.
The price emerged from the bottom of the cloud on the 23rd of September and this was a dark day for bullish traders, during which gold lost nearly $100 on a single day.
We have seen something of a correction since, and the current price of $1686.75 is significantly higher than the recent low of $1532.65 we saw on the 26th of September.
However, gold analysis shows that it is still far below the Ichimoku Kinko Hyo cloud. The green Chinkou Span line is also still far below the price of 26 periods ago, confirming that we are still in the grips of a bear run.
The fact that the spread betting price is somewhat above the red Tenkan Sen line simply confirms that we have recently experienced an attempt by the bulls to restore the previous trend. This is not enough to prove anything.
The bull market can not be considered restored until we see a clear upwards break from the Ichimoku cloud that forms a new high.
This is very far away indeed. For now we might see a sideways movement at best. Any new low could be an indication that a renewed bear run is on the way.
Good luck and happy trading
Shai Heffetz, InterTrader
(Original article written 13 October 2011).
Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives.
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'Gold Spread Betting Analysis: Bear Run Remains Strong Despite Retracing From Lows' edited by DB, updated 13-Oct-11
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