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Gold daily 23/09/13

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I wish I'd been paying more attention to this recently as the rise on the FOMC news last Wednesday took gold to a lovely area to short it from.

Not only was 1375 the perfect backtest of the trendline break, but it was also the original breakout point for the last drop (shown by the label 1) so there were two important resistances coinciding there, hence the sell-off.

For now, though, it's not clear which direction it will move in. I've put on a possible wave count for the last 2 main moves which suggest a bearish outlook and a new low below 1180, perhaps to that 1150 area we've previously discussed, though we cannot be sure this will play out.

The best way to play this now would be to go long on a break of 1375 (which, as long as there isn't a new low first, would be a 123-low breakout trade), or short on a break below 1292 (which would effectively be a 123-high breakout trade or a trade to catch a wave 3 down depending on your interpretation). Indicators suggest to me that the latter is more likely but whichever way it goes make sure you have stops as gold can, as recent history shows, move very quickly and is a highly leveraged comodity
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