Gold Forming Symmetrical Triangle, Waiting for Breakout

07/28/2009 12:01 am EST

Focus: COMMODITIES

Corey Rosenbloom

Founder and President, Afraid to Trade

Gold prices appear to be forming a type of symmetrical triangle consolidation as seen in both the daily and weekly time frames as of July 26, 2009.  Let’s take a look and note critical support and resistance levels.

All eyes of course are focused on the $1,000 per ounce level, as a breakout there would most likely lead to a large price run-up in gold.  However, we’re not quite there yet.


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The key levels to watch on a “wider” basis are the $1,000 level (critical resistance) and the $850 level, which also reflects Fibonacci support (not shown).  A breakdown from $850 would lead to an almost certain retest of $700, but again, we’re not there yet.

For now, a symmetrical triangle consolidation pattern is forming, which currently compresses price between $910 and $960.  The triangle is nearing completion, and perhaps the best play would be a clean break above the upper line to target a “magnet trade” to $1,000, or beneath the lower line also to target a magnet trade down to $850.

Until then, we are getting little guidance from the 20- or 50-day EMAs (in a consolidation phase, moving averages are virtually useless as support and resistance), so we focus on price highs and lows for clues.

By Corey Rosenbloom of AfraidToTrade.com

 

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