The Gold Report - 04 July 18
Gold has been forming an Ascending Triangle for the last 2.5 years. Finding resistance up around the $1,366 level, while forming higher bottoms along the way.
Most recently there has been a Double Top reversal pattern formed and confirmed setting up a downside target of $1,240. This week we have reached that target making a low at $1,238.40. We can find support once a target from a reversal pattern has been reached.
There is also a previous bottom formed back in December 2017 at $1,237.11 only $1.29 lower than the recent move down also looking like its acting as support.
There is an uptrend line from the bottom back in December 2015 ($1,047) which runs through the bottom in December 2016 ($1,124) which also happens to touch the most recent bottom, this week, at $1,238 which is another reason why we could be finding support around here. This is the bottom of the Ascending Triangle pattern.
Looking at the retracement from the range up from December 2015 bottom to the top of the triangle pattern the Fibonacci 38.2% level is $1,244.35. Then when we look at the range up from the December 2016 bottom to the top of the triangle pattern the 50% retracement level is $1,245.09. Both of these levels are marginally higher than the recent bottom this week and also look to be acting as potential support.
If Gold does find support around here then this could also be the second bottom in a Double Bottom (with the bottom formed back in December 2017). For this pattern to be confirmed we would need to break up above the Double Top and top of the Ascending Triangle pattern ($1,366) and in doing so sets up a target of $1,496. You can see this in the weekly chart of Gold below.
There are a number of ways to play this. You could buy some of the Australian Gold stocks which are already benefiting from a lower AUDUSD which gives you more bang for your buck. Alternately if you wanted a more direct relationship to Gold you could look at warrants on Gold. Either way I have a short list of stocks and warrants to consider.
Keep in mind that breaking below this $1,240ish area would be a sign of weakness and I would expect to see lower prices follow as this would be a failure of the Ascending Triangle pattern which would be Bearish for Gold. This is where you may consider having your stop loss and or going short to benefit from the expected move down.
If this is of interest to you please call or e mail me to discuss your options.
Gold – Weekly Chart
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May the markets move the way you’re positioned.
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