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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (51987)	5/23/2002 5:47:10 PM
From: Jill	Read Replies (1) \| Respond to of 65232

Was this posted? mips1.net there are comments from readers at the end of the article--like the trouble JP Morgan is in...and other comments... JOHANNESBURG - While consensus among technical analysts has it that gold's rally has the potential to continue to $330 and beyond, JP Morgan's London-based technical analysis team is warning clients long of gold to "exercise an increasing degree of vigilance given the potential for a bearish reversal". That verdict is based on a number of technical factors including an Elliot Wave count, momentum-based oscillators, the metal's price action, as well as moving averages and actual bullion positions, according to Craig Ferguson, Head of Commodities technical analysis at JP Morgan Securities. Ferguson's analysis of gold's price action over the past year shows that while the rally has been unquestionably bullish, the fact that previous highs constantly overlapped – four times since April last year – this signals a weakening in the uptrend and increases the chances of gold trading within a broad range. His reading of the Elliot Wave count also translates into a bearish view in that a hike beyond $330/$341 is "not expected" and that this methodology suggests an "ideal target for the termination of this upmove" at $317 an ounce. But the chartists reckon this data cannot be viewed in isolation and without taking momentum levels into account. Currently RSI and Stochastic oscillators show that on a weekly basis gold is, from a momentum perspective, in overbought territory. Levels in excess of 70 on the Stochastic scale "have delivered price declines of between $15 and $65 on seven separate occasions" since gold last touched $341 in October 1999. Ferguson reckons that from a technical point of view a "potential peak is close at hand" considering that current monthly levels of over 80 (Stochastic) and 70 (RSI) "are greater than at any time" since gold reached $418 in January 1996. Moving averages, on the other hand, "continue to give the uptrend room to move higher," according to the JP Morgan research. "These measures typically are the last to turn and confirm a change in trend." Comex positions, where speculators are long by 4.4m ounces, the largest level in years, according to Ferguson, could play a significant part in sharp downside momentum "if key technical levels break or moving averages cross on the bearish side". Keep an eye on the key $305.50 support level, suggests Ferguson, while traders should also monitor moving average crossovers for a potential turn lower. "Risks are increasing for gold and the trade feels overcrowded to us," states Ferguson. "Also when every technical analyst we know argues for $330-341, we start to think that such aggressive topside targets may not quite be seen."