Wednesday November 3, 2010 - 19:04:00 GMT
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Forex Hound - www.forexhound.com
Gold Plunges on Thin Trading Conditions
December Gold plunged over $37 or 2% after
reported better-than-expected factory orders and surprising growth in the
service sector. Thin trading conditions ahead of this afternoonâ€™s Federal
Reserve announcement may have contributed to the weakness.
Surprisingly, the media is reporting that
prices dropped because investors were worried that upbeat economic data would
dampen the size of the Federal Reserve stimulus program. In my opinion, the Fed
isnâ€™t even considering todayâ€™s economic news so the primary reason for the
break was most likely thin trading conditions.
Technically, gold could be making a
secondary lower top at $1366.40. In addition, the main trend will turn down if
$1315.60 is violated. Although the trend will turn down, losses may be limited
because of an uptrending Gann angle and a .618 retracement level at $1313.00. A
failure to accelerate through this level could generate a wicked technical
bounce to the upside.
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