Thursday, July 30, 2009

Gold - A Market To Watch



Above is a 2 1/2 year weekly bar chart of Gold Futures. This market has been chopping around since February but when you look at the weekly chart you will notice a very clear symmetrical triangle pattern developing. This pattern is one of my favorite patterns to trade because the moves are usually swift and accelerated.

Gold has a history of making large moves following daily and weekly symmetrical triangle patterns. Given that fact that the move prior to the formation of the recent symmetrical triangle was up tells me to be looking to only take a breakout to the upside. Whether or not this chart pattern turns out to be successful remains to be seen but this is definitely one market to keep an eye on in the days and weeks to come.

4 comments:

Anonymous said...

Hi Kevin, great post!!!

You said that "Given that fact that the move prior to the formation of the recent symmetrical triangle was up tells me to be looking to only take a breakout to the upside"...

So what if it breaks out on the downside? Just ignore it?! Thanks


--Joe

Al said...

"Given that fact that the move prior to the formation of the recent symmetrical triangle was up tells me to be looking to only take a breakout to the upside."

It looks to me like a symmetrical triangle could be drawn circa March-Jul 2008 on that chart, after a move up, which resulted in a move to the downside?

Anonymous said...

I believe this is part of wave 2 for gold which means the triangle will fail to the down side. It will fool many people for the same reasons as you mentioned: it looks like a bull pennant. But that's where Elliott waves have an advantage because they look at what happened before and use it to help judge what is happening now. I believe that within a month we will see a rapid dollar strengthening as debt goes bad and reduces thus reduces the money supply. It will tank silver and gold will come down too, but not as fast or as far IMVHO. Equities will roll over (all of them).

DaveT

Kevin said...

If the breakout is to the downside I will ignore it. I've found that usually these moves that are against the recent trend are false. By ignoring the downside breakout I run the risk of missing a new trend but I'm ok with that. I'd rather stick with the high probability trade and that is going with a breakout in the direction of the trend which in this case would be up.

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