Gold: Sell near $1310 – FXA

David Solin, Partner at Foreign Exchange Analytics suggests that the gold market has continued sharply, pushing past that May 2nd high at $1304 but into lots of resistance just above in the $1320/25 area (rising trendline from March, top of bull channel from May and ceiling of longer term bearish channel from June 2013).

Key Quotes

“Bottom line: new highs above that May 2nd peak at $1304, but surge since May be part of a much larger, complex topping.

Strategy/position

With the surge since May potentially part of a more major topping, would sell here (currently at $1310). Initially use a wide stop on a close $5 above that rising trendline from Mar/ceiling of the potential expanding triangle to allow for a further near term period of topping. Though there is still no confirmation of even a short term top "pattern-wise", the limited risk still makes for a good overall risk/reward opportunity.

Long term outlook

The rally to new highs above that May 2nd peak at $1304 may be part of a complex topping/expanding triangle over the last few months and not the start of a more major new upleg, with lots of longer term negatives adding to that view. They include the limited follow-through/failure on previous new highs over the last few months (poor longer term upside momentum), technicals that have not confirmed those marginal new highs and widespread bullishness (contrary indictor and not generally seen as the start of more substantial gains). Key longer term resistance is seen at $1320/25.

Bottom line: surge since May seen potentially part of a more important/complex topping over the last few months, with an eventual rolling over after.

Strategy/position:

Bearish bias from Apr 29th at $1279 remains and would use the same exit as the shorter term above to switch to neutral.”