Weekly Report 01/08 -05/ 08/ 2011

Gold is presently achieving some kind of acceptable downside correction after touching 1632.00 zones, where it met 161.8% Fibonacci expansion of A-B-C movements. We can see potential negative divergence formed and it is another technical catalyst that assisted the metal to show the aforesaid downside correction from all-time high of 1632.00, recorded on Friday. Now, we believe that the CD leg of our previous explained harmonic Deep Crab pattern is still in progress, where its reversal point or rather the technical objective of the bullish leg resides at 161.8% Fibonacci projection of XA leg as seen on the provided daily graph. Actually, those potential reversal zones of the harmonic pattern should be the first targets due to the basic harmonic rules of this structure, but breaching 1645.00 will send the metal aggressively towards 261.8% of BC leg at 1687.00.To conclude, the bullishness will be in favor during this week, supported by the continuous positivity appearing on Vortex indicator.

The trading range for this week is among the key support at 1557.00 and key resistance now at 1687.00.

The general trend over the short term basis is to the upsidetargeting 1694.00 per ounce as far as areas of 1430.00 remain intact with weekly closing.

Previous Report

Support1607.001595.001585.001579.001557.00
Resistance1628.001632.001645.001655.001670.00
RecommendationBased on the charts and explanations above our opinion is, buying gold around 1602.00 targeting 1645.00 and stop loss below 1575.00 might be appropriate.