Thursday, June 17, 2010
On the chart above I have presented 2 ideas for possible future moves in the price of gold.
1) 2 weeks ago I drew in the smaller triangle and said because of the prior uptrend this was a bullish signal for the price of gold and that a breakout above 1225 would mean a continued move upwards if the price could then close above its all time high. The gold price did break out and make a new high but the retraced but was held by the bottom line of the triangle. The price has since risen again but failed to close above the all time high. The triangle is now extended so once again if it can close above its all time high and make a clear new high then it should continue to rise.
2) The longer lines are of a wedge - this is a bearish signal. If the price fails to close above the all time and bobs around the top line but never making a clear break upwards then this would validate the idea of the wedge. This idea would further be strengthened by a fall below the bottom of the previous triangle. The formation of this wedge could continue for a while and the price could remain range bound between 1200 and 1250 but later leading to a severe drop in the price of gold. Only time will tell!
Posted by Andrew at 8:53 PM