Gold Building Higher Base
Gold proved that $1,180 was agreat support level and now is trying to confirm a higher low at $1,220. Thebreakout through the $1,220 level was a classic blow-off trade -- continuedfailure at a level and then an explosion through as we saw on Oct. 11.
After making higher lows, whichset up the big move higher, gold is repeating that same pattern, and ourexpectations are to see the pattern repeat. Blow-offs in either direction areresolved in a couple of different ways.
Now that gold has resumed aconsolidation pattern, it is doing so at yet another higher low, which is $1,220.The new range for gold is $1,220-$1,240. We will hold longs as long as thelevel holds. Our expectations are for a breakout to the upside with the nexttest at $1,275.
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