by Jordan Roy-Byrne, CMT
The Daily Gold
Last week we highlighted our gold stocks bull analog chart which showed the gold stocks correcting at least 20% at this point during both the 2008-2009 and 2000-2001 recoveries. We concluded that gold stocks were likely to continue to correct in the days and weeks ahead. While that has played out so far, we should also note that Gold is suddenly looking more vulnerable.
Unless Gold has a big bounce the next two days then its monthly chart will show a bearish engulfing candle for the month of May. That implies weakness in June. Key support levels are $1180 and $1140. The bearish reversal in May takes Gold back below its 40-month moving average at $1252. The 40-month moving average has been an excellent trend indicator for Gold throughout its history and it is the last line of defense for bears. They defended it, now bulls will need to defend $1180 and $1140.