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Gold Patterns10/16/03 10:43:06 AM
by Gary Grosschadl
The gold price challenged a previous high several weeks ago and promptly came back down. What patterns are evident?
|Analyzing the weekly chart of Gold - Continuous Contract shows several pattern possibilities. This is what makes the volatile gold markets so challenging - the myriad of possibilities. There are several patterns contained in the overall pitchfork view.|
|The weekly chart shows a previous symmetrical triangle breakout move. Often with pattern breakouts, be they triangles or other patterns, the initial breakout can be countered with a throwback test. This is a test of the breakout area or close to it and is most times very telling as it either confirms the validity of the breakout or points to a pattern failure and a move back down. Here a move down to the initial breakout area of $368 is shown. Sometimes this test will occur at or near the apex of the triangle.|
|Weekly gold chart showing several patterns.|
|Graphic provided by: Stockcharts.com.|
|This same move has now come down to test the lower pitchfork line, which shows promise of holding. This would be very bullish for a resumption of the gold uptrend. As far as other patterns evident...this can also be viewed as an ascending triangle with a top trendline drawn at $375. Or it might also be a double top attempt. Either way the pitchfork may be a good guide going forward. As long as the pitchfork's lower median line holds, the bullish intent stands for this volatile commodity until proven otherwise.|
|Several indicators displayed below the chart hint at bullish promise. The RSI (relative strength index) is a momentum oscillator that compares the magnitude of gains against the magnitude of losses. Holding the 50 level is often indicative of a bounce and shows underlying strength. Both stochastic series (one set for a shorter-term view) show a position at what are often turning points, the 50 or 20 level.|
Independent Canadian equities trader and technical analyst based in Peterborough
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