Technical Outlook Near Term

Mon March 28--April gold futures etched a marginal new all-time high on the daily chart last week, with the March 24 push to an intraday high at $1,448.60 per ounce. However, the bulls failed to defend the push to those higher levels, as the market closed slightly lower that session. Follow-through selling tugged prices even lower March 25.
In the very short-term, the bulls are on the defensive in the gold market. A sloppy, but potential "double top" pattern is seen on the daily chart, from the March 7 and March 24 daily highs. In order to actually "confirm" the bearish potential of that possible pattern a close would be needed below the intervening low or in this case the March 15 low. While that is not the near term forecast, traders simply should be aware of the possible double top.
A look at daily Bollinger bands reveals that through last Friday, the market remained trapped between the upper and middle Bollinger line. The middle line, currently around $1,421.80 will be important to monitor very short-term. If the bears were to press the April gold contract under the middle Bollinger line, it would open the door for near term declines toward the lower line, currently around $1,396.30.
The daily relative strength index (RSI) remains negatively positioned for the very short term, which could support any near term bearish attempts.
Looking at the gold market from a top down approach, the longer-term primary technical trend remains solidly bullish. However, in recent months, the intermediate term trend has shifted into a neutral or sideways bias.
Since November 2010, the gold market has largely moved sideways within a large intermediate term trading range, though early March did see the bulls press the top of that range to marginal new highs just below the $1,450 zone. Very broadly speaking, one could define the medium term range between $1,450 and $1,309.10, the January 28, 2011 low and the lowest price traded since late September 2010.
Markets very often shift into sideways consolidative types of modes as a form of "correction." From late July 2010 into early November 2010, gold bulls thrust the market sharply higher over that several month period. Several months of subsequent sideways or consolidation action is not a surprise and can actually be healthy for the longer-term bull trend.
Finally, drilling down to the very short-term trend for April gold, the near term bias is down in the wake of the retreat off the new high seen March 24. Very short-term gains would be needed back above $1,438.10 to target a retest of the $1,448.60/1,450 zone.
If short-term support at $1,419.50, the March 22 low is broken, the gold market will be vulnerable to additional minor near term declines, with major support at the March 15 daily low at $1,380.70.
Jim Wyckoff  exclusive to Kitco