When the monthly PMO (Price Momentum Oscillator) reaches a range extreme and changes direction, it is a pretty good indication that the long-term trend is changing. PMO direction changes in the middle of the range can often just be "noise", but, when the PMO has a long, sustained move in one direction and changes direction at an extreme overbought or oversold level, it demands our attention.
Such is the case now. The monthly PMO has been moving up for nearly three years, and it turned down this week. The PMO direction change is not official until the end of March , and, if gold rebounds from this correction, the PMO could still be rising as of the close on March 31. However, the situation is critical. Price has failed to hold above the long-term resistance around 415, but it remains above the the most accelerated rising trend line. If that support fails, chances are that gold will enter a correction lasting at least several months.