Aug 102011

The up move in Gold is starting to look similar to what silver was in April. Yesterday's intraday high of 1782 and a much lower close is the first warning sign. This does not necessarily mean that Gold will start crumbling right away. In fact an erratic rise, like the two scenarios shown on the chart below would give traders an ideal shorting opportunity and would be a classic parabolic end.

Gold - Daily Charts

In Technical terms: This is an extended wave 5. Almost always when the extended moves ends, it will be followed by a VERY HARD drop.

The sentiment picture: Talk to anyone around you, they will tell you must be insane not to own gold. I've been seeing facebook status from wannabe analysts and public stating heads or tails Gold wins. That is your sentiment picture screaming that the boat is about to capsize.

So, it is absolutely essential to understand that this not the time to create new long positions in Gold. If you are already long, be ready to fold.

  7 Responses to “Caution: Gold’s move getting parabolic”

  1. What about NIFTY? Still 4800 or below, and period also please.

  2. what about NIFTY, still your view is 4800 or less?

  3. Hello Mr. Bala,
    I am very happy to note that you have cited a caution on the Gold’s price movement.

    This may be a contrarian view at this point in time but it is commendable that you are writing what you are understanding from your expertise and vast experience while the world is and may continue to park its funds in this safe haven believing that gold will continue to make new highs…atleast for few more months to come…until the uncertainty recedes..

    Keep up the good work!!

    Best Regards,

  4. Jai,

    Do u think the fall has started ?


    • Rut,

      Do not worry about the terminology. Just see the one year daily charts using bar charts and can you see the number of red bars? They exceed the green bars by a wide margin. That is what is called a left translated market – market spending more time going down than going up. This happens all the time in a bear market.

      Do I think the fall has started?? ­čÖé Check the Nov 24 Post and Jan 19th post.

      Good trading,

  5. Thank you sir……cheers

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