April Comex gold futures (GC J3) prices this week hit a fresh 8.5-month low as bears are in full near-term technical command. Traders are still digesting the release Wednesday afternoon of the Federal Reserve’s Open Market Committee minutes from early January. Those minutes said U.S. economic conditions are improving to the point that some FOMC members think its massive asset- purchasing program (quantitative easing) may have to be changed soon. That was a bearish fundamental blow to the raw commodity market sector, including gold.
Technically, April gold futures have seen serious near-term technical damage inflicted recently. Gold prices are in an accelerating four-week-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,618.80. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at the May 2012 low of $1,538.70.
Gold is one important “outside market” that has had a significant influence over many other markets in recent months. Such will likely continue to be the case in the coming months. My friend and market analysis software pioneer Louis Mendelsohn has been studying this markets relationship phenomenon, called Intermarket analysis, for decades. No trader should overlook or underestimate the importance of the Intermarket phenomenon.
From an Intermarket analysis perspective provided by VantagePoint Intermarket Analysis software (www.TraderTech.com), it appears April gold futures prices will continue the near-term downtrend.
VantagePoint is a valuable trading tool for which a trader can glean clues on potential near-term price trend changes or continuation of present trends. These near-term clues provided by VantagePoint can and do give a trader a key edge.
See on the VantagePoint daily bar chart for April gold that the Predicted Medium Term Crossover study shows the blue predicted 4-day exponential moving average is below the actual black 10-day simple moving average close, which is a near-term bearish technical signal. Both lines are also trending lower, which is also a bearish clue.
The Predicted Medium Term Crossover is the predicted 4-day exponential moving average of typical prices two days ahead (P4EMA+2) crosses above or below the actual 10-day simple moving average close (A5SMA).
It’s the early technical clues such as the Predicted Medium Term Crossover, provided by VantagePoint, which are so valuable to traders in their quest for consistent trading profits.
Also see at the bottom of the daily chart for April gold that VantagePoint’s Predicted Neural Index (PIndex) is also in a bearish mode, with a reading of 0.00. The PIndex is a proprietary indicator that predicts whether or not a three-day simple moving average of the typical price will be higher or lower two days in the future than it is today. The Predicted Neural Index compares two three-day moving averages to one another – today’s actual three-day moving average with a predicted three-day moving average.
When the predicted simple three-day moving average value of typical prices is greater than today’s actual three-day moving average value, the Predicted Neural Index is “1.00,” indicating that the market is expected to move higher over the next two days. When the predicted simple three-day moving average value of typical prices is less than today’s actual three-day moving average value, the Predicted Neural Index is “0.00,” indicating the market is expected to move lower over the next two days.
The Predicted Neural Index is either correct or incorrect so its performance can be measured in terms of percent correct to produce the accuracy statistics cited for VantagePoint, which has a predictive accuracy rate of around 85% across a wide range of markets and time spans in ongoing research.
