Gold Smackdown Update

The Fed's attack on Gold may have backfired badly and the unintended consequences may get out of hand very quickly.

Margin selling on Monday, which may continue into Tuesday, tank gold market hard, but it is not just gold that tank. Panic selling spread to many asset classes including stocks and commodities because traders who suffered losses in their gold trade has to sell whatever they own in order to meet their margin call. 

Next Support Levels are $1,345 then $1,290, but keep in mind that during a major liquidation selling could slice through support levels without pausing. 

Short is still the preferred trade direction until price action indicates otherwise. If the 2008-style market meltdown has been triggered, then gold may tank all the way down to $1,000 before finding support.

Gold Chart from Friday April 12, 2013

Gold Chart From Monday April 15, 2013

Gold Futures Chart (GC)

Current events in Cyprus could be the catalyst for the next major up-leg in Gold price, but it would need a sustained break above key level to trigger the next leg up to go to at least $1800.  

However, it would need a clear break above $1800 to cause a panic short-covering rally.

Key Point-of-Control Level is $1640

First Resistance = $1800

First Support = $1540-$1560

April Gold Futures Chart

S&P 500 Topping Pattern

S&P 500 Elliott Wave Pattern