Goodbye QE3 Hello QE4

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The gold consolidation may already be over. Please click here now. On this one month chart, you can see that since QE3 was announced on September 13, gold has essentially moved sideways. That “trading box” is likely a consolidation pattern.

Please click here now. You are looking at a two day chart for gold. A small but significant head & shoulders pattern has formed, implying that the gold price will rise above $1800, before a correction occurs.

Many technical indicators and oscillators are overbought on the daily chart, but they can stay that way, while gold marches higher.

Investors who hold solid core positions in gold, silver, and gold stocks should stand their ground. Traders could lighten up a bit, in the $1775-$1825 price area.

Please click here now. A beautiful channel has formed on the GDX daily chart. A “non-confirmation” is highly likely now; GDX could move higher, while the technical indicators move lower.

I would suggest that traders focus their attention on the green HSR (horizontal support & resistance) lines that I’ve highlighted on the chart. The indicators and the trend channel are exciting to watch, but they don’t offer the same precise entry points that HSR does.

Longer term investors should probably focus their buying around the important HSR at $48.72. That point is also the “neckline” of a double bottom formation.

Please click here now. The technical target of the double bottom is the $56-$58 price zone. A rally towards that area would provide a great profit booking opportunity.

Gold has climbed about $270 from the lows, so keep in mind that any further strength is only going to make gold much more technically overbought than it is now, in the short term.

The $1775-$1825 area should be viewed as the “wild card zone”, because anything is possible. Gold could shoot quite a bit higher, or careen lower.

Intestinal fortitude is going to be more important than charts or economic reports, during this stage of the gold bull market.

Sell-offs are likely to get much more frightening, and price spikes could become enormous. Unless the gold price arrives at one of your pre-set buy or sell points, try to ignore all the intra-day “stage drama”. The drama is nothing more than static noise interfering with your golden symphony.

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