Friday, October 9, 2009

A Look At the Gold Chart

Gold has been in the news lately so let's take a look at the chart to see what it says.


First on the long term chart notice there are two important formations.

1.) A head and shoulders. This formed over a one and a half year period. Remember -- the longer the formation takes to form the more important it is.

2.) Within the right shoulder we have a triangle formation that formed over a six month period. again note the length of time in the development of this pattern


A.) Notice that prices spent a few weeks consolidating right at the head and shoulder's neckline.

B.) Prices broke out on a gap higher with good volume.

Also note the technical picture of the EMAs -- the shorter EMAs are above the longer EMAs, all the EMAs are rising and prices are above all the EMAs. This is a very bullish posture.



A.) Prices are above the upper Bollinger band. This indicates prices are a bit over-extended and are likely to move a bit lower. However, that does not mean a precipitous drop in prices -- only a bit of profit taking.

B.) The MACD as some upward room to run from a momentum perspective.