Gold bugs should avoid the light
The current steady trend is frequently tested with rapid retreats and rebounds which often end up breaking the uptrend
Add BT as a preferred source
LIKE moths to a flame, gold bugs are attracted to higher prices. Sometimes this attraction results in self-immolation, but more often it results in self-deception. The gold bug lives in hope. Evidence of this is in the chart pattern identified on the weekly chart of gold. It is a bullish flag pattern.
Typically, this pattern is a powerful signal of rally continuation after an initial fast rally and pullback. The pullback creates a 'flag' defined by parallel sown sloping support and resistance lines. The height of the first leg of the rally - the flagpole - is measured and this value is projected upwards when price breaks above the upper edge of the sown sloping flag. This gives a breakout price target.
In a bullish market environment, it has a high reliability factor, reaching the projected price target in around 80 per cent of cases. Applying these price projection techniques to the weekly gold chart gives an upside target near US$1,740, or a 21 per cent increase from the current price.
Copyright SPH Media. All rights reserved.
