Donot buy Gold now

Donot buy Gold now……

Ascending triangle has been regarded as a continuation of the upward trend and has proved as a successful technical pattern if we look historical charts. However, it has acted as a reversal pattern in some situation and here in Gold Spot chart is trying to display the same as reversal of the recent downturn.

Our logics for commenting a short term reversal

· Struggled around 1420-1430 and failed to breach the top thrice.

· Recently volume declined around $1420-$1430 area and when prices started falling below $1400, volume started increasing. Open interest is slightly easing, suggesting profit taking in the market

· Broken the trend line support of the bull trend started from $1310 to $1431- the support was pegged at $1375

· Daily close below the 50 day’s EMA for the first time after 12^th September, 2010

· Momentum indicators trending lower along with the prices in the weekly chart. The daily RSI (14), however, is slightly at the oversold territory, but can adjust with a pullback

· A wedge formation is confirmed (not a pure steep wedge) from $1150 low to $1431 high. A wedge pattern act as a reverse of the body, which it covers unlike other triangle such as symmetrical triangle formation. If the wedge is edging higher then uptrend to reverse and vice versa

Key levels to look out

As per view above, the market is expected to see decline. To keep the short term bearish trend, the market need to sustain below $1385-$1395levels (the resistance levels of a upward moving trend line is higher than the level of its breakout).

On the lower side, support is at $1325-$1315 ($1325 is the 38.2% retracement level of $1157 to $1431 bull trend) and $1314.70 is the low posted in October 2010). Below $1315 the market may see further decline which can lead prices towards $1265 (Top of June 2010 and also the 23.6% of the

Short term traders can look for selling on pullback towards $1370-$1375 for a target of $1325 and can extend target towards $1265 (Top of June 2010) or $1255 (23.6% retracement level of rally started from $681 in 2008). The correction may stop around $1265-$1255 levels where some fresh buying interest may emerge.