Fibonacci Arcs
by Morris Hubbartt
321 Gold
US
Dollar Fibonacci Resistance Chart
Analysis
Money is being
created worldwide, but not through work and investment. IÂ’m
referring to money printing. Assets are being held at above
market value with accounting techniques, to protect bank balance
sheets. This new “state of the union” requires
ongoing money creation to maintain itself.
When the US
government speaks of a strong currency, what they really mean is
a competitive currency. The European crisis is causing a
rally in the dollar and negatively affecting gold.
That very
rally is making the United States even less competitive than it
already is, and nothing significant has changed in regards to the
US debt crisis.
Use the
dollar rally as an opportunity to build your position in the ultimate
currency, which is gold.
Do you believe
that a crisis in Europe just solved AmericaÂ’s enormous debt
problems? The US remains the greatest debtor nation in the history
of the world, and the debt problem is worsening. The dollarÂ’s
fundamentals are unchanged, and it remains in a long term bear market.
Take a good
look at the above chart of the US dollar, and the Fibonacci resistance
points. The dollar is at the 50% Fibonacci retracement line now.
Traders are making a serious error betting large capital on a terrible
fundamental situation like the dollar, and the technical situation
is not very good either.
I mentioned
the black candle warning, and suggested that was opening the door
for price appreciation in the metals and that is exactly what we
got. I see the dollar headed much lower over the long term.
Be careful
about thinking you can outsmart the gold bull. Prices decline in
every market, at times. This gold market has been hit with selling
and fear, but it is a necessary cleansing process that puts gold
into stronger hands.
No gold investor
enjoys this process, but gold should make new highs, many more times
before this bull market ends. Gold is the ultimate long term winner
in any debt crisis, and selling out because EuropeÂ’s debt woes
are growing simply makes no sense at all.
Looking at
the above chart, you can see that in 2008, the gold price shot up
about 33%, after the initial commercial buying. From there the low
was violated by about $57. That technical failure was greeted with
even more commercial buying. From there, the price soared
almost 50% in just four months, hitting an all-time high.
$1540 is a
very important price point for gold. It is a major area of support.
There is potential for a double bottom in play, and it is accompanied
by heavy commercial buying. Historically, such buying has had great
impact on the gold price, carrying it substantially higher.
Further, the
upwards trending 290 day moving average is near $1540 now. The key
Fibonacci 61.8% retracement line also sits near $1540. If this market
does go down to test $1540, I see a strong chance it passes that
test with flying colors.
All signals
look good to see gold $2330 in 2012 and likely by mid-year. I was
becoming concerned that my superhighway price channel was too narrow,
but this correction has made the channel I envision more realistic.
Quite a number
of gold investors are now shorting gold, and that is becoming a
bit of a wild card. A short-covering rally is very possible as the
tax-loss selling dries up and buyers begin to dominate sellers.
December
27, 2011
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© 2011 321 Gold