Gold, important bottoming?

Gold near term outlook:

In the Oct 21st email, said that risk was rising for at least a week of downside, and the market has indeed tumbled since that day's high at $1255. In the big picture, again approaching that longer term, key support in the $1175/90 area (base of the huge triangle since June 2013) and "prefer" the view of a larger bottoming (see longer term below). Note that the seasonal chart is higher from here into Dec (see 3rd chart below), both silver and the gold mining equity index (GDX) have indeed pushed to new lows (said in Oct 21st email new lows were needed and was a short term bearish factor for gold), and the upmove from the Oct 6th low at $1183 occurred in 5 waves/upside not "complete" (see numbering on hourly chart at my blog at http://www.fxa.com/solin/comments.htm , email me at [email protected] if you need a password), supporting this larger bottoming view. Don't forget however, that markets will at times just accelerate through these key levels and with no confirmation that the downside over the last week is "complete" (so far) and weakening technicals (see new sell mode on the daily macd at bottom of chart below), is a risk. Bottom line : "prefer" the view that recent weakness is part of a more important bottoming.

Strategy/position:

With the view of a more important bottoming, would use the last week's tumble as a chance to buy (currently at $1202). Initially use wide stop on a close below $1170 (to allow for more bottoming nearby).

Long term outlook:

The very long held view of a large triangle/pennant forming since the June 2013 low at $1181 is still unfolding. These are generally seen as continuation patterns (wave IV in the fall from the Nov 2011 high at $1803), suggesting an eventual downside resolution. However, triangles break down into 5 waves and "ideally" targets gains all the way back to the ceiling/bearish trendline from Aug 2013 first (currently at $1345/55, see in red on weekly chart/2nd chart below). Bottom line : long discussed triangle since June 2013 still forming, with scope for final upleg to the ceiling (currently at $1345/55).

Strategy/position:

With gains to the ceiling of the triangle favored, would also switch the longer term bias from neutral to bullish here (currently at $1202). Use the same exit above (daily close below $1270), as such a break could trigger a further, downside acceleration.

Current:

• Nearer term : long Oct 30th at $1202, initial wide stop on close below $1170.
• Last : short Sept 2nd at $1265, took profit Oct 2nd at $1213 ($52 profit).
• Longer term: bullish bias Oct 30th at $1202 for "ideal" gains to ceiling of large triangle (cur at $1350).
• Last : bearish bias July 24th at $1300 to neutral Oct 10th at $1221.