uptrend ahead trying to break 1616 for 1800

(Kitco News) - Mon July 18--August Comex gold bulls rocketed the contract to a fresh all-time high Monday at $1,607.70 an ounce in morning action. The recent upside breakout from the early May-mid July sideways trading range has reaffirmed the bullish technical trends, with no technical points overhead as the market soars into uncharted territory.

Since July 1, August Comex gold has vaulted sharply higher, in an accelerated uptrend, with little to no pause or correction. Over the last nine trading sessions, the August contract has posted consecutive higher settlements.

"The most obvious and glaring thing is that the gold market has reaffirmed the uptrend on every scale. As cliché as it is—the trend is your friend—and we've just posted new all-time highs again," said Dave Toth, director of technical research at R.J. O'Brien in Chicago.

Toth added that the push to new all-time highs is "not surprising. All the May-June lateral price action was consolidative reinforcing the secular bull trend. The challenge is now what do we do? Does anyone want to buy it up there? You certainly can't sell it."

Overall, looking across the spectrum of commodity markets from a technical perspective, Toth concluded that "gold is arguably the strongest market on the board. The trend on every scale is up. You have to buy it."

With no resistance on the upside, technical traders are left monitoring clearly defined support and/or stop-loss levels on the downside.
For shorter-term traders, Toth pointed to the July 15 daily low at $1,576.00 as the key support level and or risk parameter to use for a stop-loss point. "As a direct result of Friday and Monday's gains, the market has left the $1,576 low as the latest corrective low and tightest risk parameter minimally required to confirm a bearish divergence in momentum sufficient enough to define some semblance of a high and objective resistance," he explained.

"Until the market falls below $1,576, the trend is up on every scale," Toth said.

For longer-term traders, Toth identified the July 1 daily low at $1,478 as the most significant risk parameter and potential stop-loss zone.
Because of the nearly straight-up nature of the rally since the beginning of July "there is no level between $1,576 and $1,478 that anyone can rely on as a support candidate," according to Toth.

Meanwhile, shifting over to the September silver contract, after two and a half months of sideways trading, the bulls have seized control of the short-term technical trend and sparked an upside breakout on the daily silver chart.

Toth said the rally Monday confirmed that the intermediate term trend has shifted back to the bullish camp in the silver market. He pointed to the July 15 low at $37.89 level as a key short-term risk parameter. "Until the market falls below $37.89, the trend is up and traders shouldn't be surprised by further acceleration."

Additionally, adding fuel to the silver rally has been a sharp drop in bullish sentiment levels in recent months. Bullish sentiment is often utilized as a so-called "contrarian indicator." That simply means when sentiment levels rise to extreme or very high levels, it is interpreted as a bearish signal, with the thinking behind it that there is no one left to buy.

Toth noted that Bullish Consensus sentiment readings hit 95% on April 19—a high extreme reading for silver, which presaged the sharp market collapse. "Two weeks ago, Bullish Consensus hit 59% that is the least bullish that indicator has been since February 2010," Toth said.

From a contrarian sentiment standpoint that is considered bullish now for the silver market.

Looking ahead, Toth said there is little chart resistance ahead of the $49.51 high as the market experienced a virtual free-fall off that level. "That doesn't mean we are forecasting it to go up that high," he warned. But, for now until $37.89 is taken out on the downside, the "trend is up," he concluded.

(Kitco News) -- Gold prices could target a rise to $1,800 an ounce, but the market needs to power through stiff resistance just above current levels, says Walter Zimmerman, chief technical analyst at United-ICAP. The yellow metal has just cracked psychological resistance at $1,600, but Zimmerman says gold bulls need a decisive move above the $1,616 to make a case for $1,800. That could come this week. Using Elliott Wave technical analysis, he points out that gold has just completed a fourth wave with its downside move to the $1,478 area in July and the current rally is setting up for this critical technical chart test at $1,616.