1/18/2010 - GOLD - Price action on spot gold, a daily chart of which is shown, has formed a potentially bullish pennant consolidation pattern within the context of its rebound off December lows. This rebound is represented by a short-term uptrend support line extending from the December 22 support low around 1074. This all occurs within the context of an overall, continuing uptrend. Any significant breakout above the pennant consolidation could signify a potential recovery in gold and an uptrend continuation that could ultimately target further resistance around the 1225 all-time high. Any significant breakdown below both the noted short-term uptrend support line and the pennant pattern could target downside support in the noted 1070-74 support/resistance price region. Any substantial breakdown below that support level could place the current long-term uptrend in jeopardy.
James Chen, CMTChief Technical StrategistFX Solutions
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