by Clive Maund
Gold’s post breakout reaction back from its early September peak has evolved into a steady downtrend as we can see on its 6-month chart below. The approach of the rising 200-day moving average below suggests that this reactive downtrend will have run its course before much longer leading to a second upleg. However, gold’s COTs have shown no improvement as this downtrend has unfolded, which is a sign that the downtrend has further to run. The now orderly downtrend has one distinct advantage which is that bulls simply have to wait either for a breakout from it or the development of a basing pattern. One indication that the downtrend is a correction and not the start of something more sinister is the positive divergence of the Accumulation line compared to the price.