Bullish Digestion for Gold, Euro Monday, February 06, 2012 by Michael Paulenoff of MPTrader.com

Spot gold continues to respect the integrity of its up-slanted channel off of the Dec 29 corrective low at $1522.48.  As long as the lower channel support line remains intact in the vicinity of $1700, the uptrend channel will continue to dictate the directional action of gold.

Today's low at $1711.57 could be the conclusion of a pullback off of last Fridays high at $1763.71. A climb above $1730 is needed to trigger initial confirmation that $1711.57 ended the latest correction, and that a new upleg within the channel has started.

Meanwhile, let's also notice that EUR/USD pressed right to test last Wednesday's pullback low at 1.3025 and managed to hold that level prior to pivoting to the upside to 1.3120/30.  This left behind a small but potentially important Double Bottom corrective low.

As long as 1.3025 contains any forthcoming weakness, my pattern work argues that all of the action off of the Jan 29 high at 1.3235 represents a bullish digestion period, in preparation for a thrust to the upside that projects next to 1.3330/60.

Recent articles from this author

• Cycle Bottom Due for Gold - Thursday, May 17, 2012
• S&P 500 Cycles Indicate Downtrend Incomplete - Wednesday, May 16, 2012
• Brent-NYMEX Oil Spread Widening - Tuesday, May 15, 2012
• Climbing Dollar's Potential Impact on Commodities - Monday, May 14, 2012
• Down-leg Completed in Gold - Friday, May 11, 2012

About the author

Michael Paulenoff is author of MPTrader.com , a real-time diary of his trading ideas and technical chart analysis on stocks & ETFs.  He has been involved in the world financial markets for three decades since his graduation from the Georgetown University School of Foreign Service in 1979. Early in his career he analyzed the fundamental and technical aspects of the financial and commodity futures markets for Smith Barney, Harris Upham, and for Drexel, Burnham, Lambert. From 1988 to 1993 he was President of MJ Capital Inc., a market analysis and trading firm, which advised clients involved in the financial futures and commodity markets. In 1992-93, he co-authored The Business-One Irwin Guide to the Futures Markets (with Stanley Kroll). 

Republic National Bank recruited Mike in January 1994, for the position of strategic trader, and market analyst on the bank's trading floor, which included analysis and trading of instruments in foreign exchange, emerging markets, stock indices, and precious metals. In February 1999, Mike founded MJP Market Strategies, Inc., a financial market advisory firm, and developed www.mjpstrategies.com in October 1999. In addition, from August 2000 through August 2001, he was the chief on-air market consultant and strategist for JAGfn, a live, daily 8-hour financial market webcast and cable TV show produced by Jagnotes, Inc.

Mike has been a contributing analyst to Harry Boxer's The Technical Trader since June 2002, and in February 2003 launched MPTrader.com. His articles and commentaries are widely distributed on sites such as MarketWatch.com, WSJ Online, Trading Markets, Optionetics, and Minyanville, where he is a contributing "professor."