Gold breaks out of triangle pattern today and hits as low as 1890.17 so far. The development suggests that corrective pattern from 2075.18 is starting another falling leg for 1862.55 support first. Break there will target 61.8% retracement of 1670.66 to 2075.18 at 1825.16. At this point, we’d expect strong support around there to contain downside to complete the correction.
However, it should be noted that the strong break of 55 day EMA could be a sign of larger correction. This is not our preferred scenario yet. But firm break of 1862.55 would argue that Gold is indeed correcting the whole rise from 1160.17. In that case, deeper fall would be seen back to 38.2% retracement of 1160.17 to 2075.18 at 1725.64 in the medium term, which would then be close to 55 week EMA (now at 1696.48).
DOW breaks 55 day EMA, heading back to 25000
DOW opens sharply lower and it’s trading down nearly -900 pts at the time of writing. The strong break of 55 day EMA (now at 27340), and bearish divergence condition in daily MACD, suggests that 29199.35 is at least a short term top. Currently, we’re viewing it as a correction to the rise from 18213.65 first.
Even that case, deeper fall would be seen to 24971.03 cluster support (38.2% retracement of 18213.65 to 29199.35 at 25002.81), which is also close to 25000 psychological level. Reaction from there would tell use whether this assumption of correction is correct, or DOW is indeed reversing the whole move.