Gold 1-3-12

Gold has become of highly active trading vehicle since the financial crisis and the current issues throughout the ECB Union.  The Zone-Trader Philosophy generated a sell signal at 1742.10 on the February 2012 Gold Futures contract, on the 18th of November 2011.  Since that sell triggered Gold has sold off into the end of the 2011 trading year, reaching a low of 1523.90.  GCG12 failed to hold the time filter which is 4 consecutive weeks above MR4 and that is what triggered our sell at 1742.10.  We then expected GCG12 to trade back towards MR2 where it established the uptrend.  The price of MR2 is 1507.90 which is just slightly below where GCG12 made its current low at 1524.90.  Going forward it is crucial that GCG12 stays above the MR2 level where the uptrend gets established within the Zone-Trader philosophy if it going to have any chance of making a resurgence back to the 1800 level.  If GCG12 falls below the MR2 price level at 1507.90 then we expect GCG12 to continue lower as it will then revert back to the Zone-Trader Pivot at 1377.45.  The Zone-Trader Pivot is the midpoint of the Neutral Zone and is also referred to as being the Point of Control.  Now we currently have a blue candle plotting on the Yearly profile which is a strong bullish color candle within our paint bar study.  If GCG12 can take out the high of the prior week and make a retrace to the upside from the latest sell off the key level for traders to pay attention to will be the midpoint between MR3 and MR4.  The Zone from MR3 to MR4 is called the trend extension zone and we look for a candle body close above the midpoint to determine if the underlying instrument is extending the trend or not.  This tells us whether or not GCG12 will make another wave to the upside.  The price of the midpoint between MR3 and MR4 is 1682.95.  Now i am aware that GCG12 trades in .10 increments so don't let the .95 throw you off just pay attention to the close of the weekly candles and see if it closes above or below that price.  If GCG12 closes above 1682.95 it can continue higher back to the 1800 level.  If GCG12 cannot close above 1682.95 on a weekly chart then look for a continuation of the current sell off back to the Zone-Trader Pivot at 1377.45.  This is the current picture being painted on the yearly profile hope this helps bring some clarity to the picture.