On Nov 27, Gold opened at 1194, then moved up a little bit and recorded a new history high at 1197. Upon the Dubai news, Gold dived to 1138.4, then end up managed to close at 1179, leaving a shadow of more than 40 points. It is a strange pattern, 60 point candle with 20 point body and 40 point shadow. How is the market going to interpret the strange candle?
Reading:
1. The dip on 11/27 measured 61.8% of the rally started from 1100 level, then hit 1197.
2. Gold resumed rally and marked a new history high at 1227.5 4 days later on 12/2.
3. Crashed since 12/2.
Gold Chart:
With help from my Chinaman, I noted similar situation happened in Shanghai before.
1. SSEC started from the previous swing low at 3060 and peaked at 3450 on 7/29. Then on 7/29 after made a new high, the index dip to 3215, which is also 61.8%.
2. Rally resumed and marked a new high 4 trading days later to 3485 on 8/4.
3. SSEC made significant retracement since then to 2640, which is 50% of a larger pattern, and spent 3 months consolidation.
Guestimation:
Gold will follow SSEC to go down for the next 3 months, first struggle around 38% at 1105 then find support at 50% retracement at 1065 level.
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