Friday, July 23, 2010

Another Buy-On-The-Dip Recommendation

As summarized by Jay of "Market Folly," a MarketClub analysis using Elliot Wave tools came up with an entry zone between $1,157 and $1,132. The former is near the 50% retracement level from gold's record high, and the second is near the 61.8% level. Both are support levels.
MarketClub also points out a previous bearish divergence in the MACD as it turned negative while gold still headed higher in May and early June. That divergence provided an early signal as gold began to decline in late June. Adam thinks a divergence to the upside is about to take place and an entry point into a gold long should be coming.

Keep in mind, though, that he still feels gold will trade down/sideways in the very near-term. The buy level he is looking for is between 1,132 and 1,157, which implies some further downside. Those levels, coupled with confirming indicators, could provide an excellent entry he feels....

Again, there are lots of buyers who will have their orders triggered long before $1,157 unless there's a plummet that encourages them to pull their bids. The only way I can see the zone being entered is through such a plummet and its aftershock.

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