Yesterday’s gold tout remains fully intact after a day of trading within a limited range. Until either the high of 1621.30 or the low of 1605.90 is broken, we will be watching and waiting, with chart patterns favoring the upside.
Recently many traders were impressed by a bullish breakout from a triangle formation, but since then gold has continued to make lower highs and higher lows. This probably signals an accumulation of potential energy which will be released soon, perhaps at the end of gold’s seasonal summer doldrums. The attached chart displays many of the prior highs and lows that are exposed to an impulsive burst.
A breakdown would send the market toward its final low of this long-running correction. An upward breakout would presumably also be very energetic, but given the dimensions of the rally from 2008 to 2011 and the shallow 21% correction since then, we should be prepared for it to fail to make new all-time highs and to be followed by a significant corrective decline. (Posted by Doug “harry” McLagan)