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« Mining Stocks or Funds The Tussle Continues | Main | Randgold Resources Limited: As Good as it Gets »
Tuesday
Sep012009

Gold: Watch This Wedge

With technical indicators such as the MACD, STO and RSI fairly neutral, gold is at a crossroads. The chart below shows how gold prices are in a large wedge formation, going back a good six months.

Gold: Watch This Wedge

This wedge formation is what we will be watching very closely over the next few trading sessions for signs of a breakout. As of yet we are not totally sure which way gold will go. Our gut says up and out, but there is a possibility that we could see a sharp drop down before gold embarks on a massive rally over the next few months.

If gold breaks up and out of this wedge formation, it will certainly be a very bullish sign, however the real hurdle lies just above $1000. Sure, a break up and out will produce a fifty dollar rally and maybe a 20% gain in gold stocks which is all well and good, but the for the real substantial gains to be made gold prices need to make a new all time high. When this happens we think that gold prices will swiftly move to $1200, en route to $1500 and then $2000.

This is the mega move we are trying to get best positioned for, as this is where fortunes will be made. We see this move happening within the next two months and will possibly be coupled with the end of this bear market rally in the broader equity markets.

So its a good idea to have a core long position on gold, and look to add to this on dips and when possible trading opportunities arise.

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Reader Comments (7)

The article says that a rise in the gold price "will possibly be coupled with the end of this bear market rally in the broader equity market."

Question: Wouldn't gold and gold stocks decrease in price with an equity sell off, like last fall, at least initially?

September 1, 2009 | Unregistered Commentergary

This may help put US Fed statements in a more correct light.

"The Fact that our economical models at The Fed, the best in the world, have been wrong for fourteen straight quarters, does not mean they will not be right in the fifteenth quarter."-- Alan Greenspan

September 1, 2009 | Unregistered CommenterBC

yep, watch it. keep your stop tight. i think the break down could be going from thursday evening sep 3 into friday sep 4, and next week, we are going close at 850

September 1, 2009 | Unregistered CommenterDi

Gentlemen, look at the weekly chart also. There´s a bearish signal coming, double top I beleive. I´d better shorten. Best regards, Toni

September 2, 2009 | Unregistered CommenterToni

looks like wedge just got broken.

regards
activeintl

September 3, 2009 | Unregistered Commentersss

looks like wedge just got broken

January 8, 2011 | Unregistered Commenterfari

fari,

this article was posted in September 2009.

January 10, 2011 | Unregistered CommenterGold Prices

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