The uptrend with gold was well defined using a Guppy Multiple Moving Average (GMMA) indicator. The long-term GMMA was well separated and this generally shows strong buying support from investors. The upper edge of the long-term GMMA was a little above the historical support level near $1,290. The first fall below the upper edge of the long-term GMMA was a warning. The second fall below this level is a decisive change in the direction of the trend. It cannot be ignored.
A continued fall below the edge of the long-term GMMA has support near $1,180. This is the current downside target. Failure to hold at this support level sets a target near $1,050.
This is now a change in the trend. Aggressive traders used the ANTSSYS method to trade the rally rebound and to cover and go short as the market collapsed below $1,300.
Chart analysis was Trumped, but traders survived by using good stop loss conditions. Chart analysis now gives the downside and support targets.
Daryl Guppy is a trader and author of The 36 Strategies of the Chinese for Financial Traders, available at guppytraders.com. He is a regular guest on CNBC's Squawk Box and a speaker at trading conferences in Asia, Australia and Europe.
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