Wednesday , 17 July 2019

Gold: Strengthening Technicals Forecast Strong Upward Price Movement

…We may be nearing a point in which gold takes center stage among investors once again…[as] good news may be on the way for gold bulls in the form of strengthening technicals.

Bullish Technical Signals

A new bullish pattern has been forming in gold since January of 2018. Prices exhibit an extended cup and handle pattern that is typically associated with bull market price moves.

Cup & HandleImage Source: GoldPrice.org

You know the pattern is bullish when a full cup forms, as we see in the picture. As well, the handle portion on the right of the cup needs to be downward sloping, as it is with the current gold price. Further, the pattern we see in gold fits in with the typical time frame in which cup and handle patterns result in strong upward price movements.

The size of the bull move is related to the depth of the bottom in the cup so I would expect that the potential top of the next bull market in gold to be about 160 points, which would put it around the 1440 level…

Long Term Technical Outlook

As you can see on the following longer term chart, there is strong reason to believe that support is building for higher gold price plateaus.

Gold Long Term Technical OutlookImage Source: GoldPrice.Org

…The current range is a 50% increase from the highs experienced in 2008 and the current price is 3x higher than the $400 price level found in 2005. This is one of the main reasons gold bulls are so adamant in the value of gold over time. Gold is doing what it is supposed to do – hold value against inflation of prices while providing a safe hedge against the periodic uncertainties found in financial crises.

Fast forward to today, and we see not only a cup and handle forming since 2018, but higher lows forming a base under the current $1350 resistance point. This building base appears likely to propel the gold price through resistance during 2019, should the technical formation hold true to form.

How High Will Gold Go?

We do not know what the price top will be for the next leg of the gold bull. There is a key $1600 resistance/support line that will need to be crossed…[but,] if you believe, as I do, that economic fundamentals ultimately assert power over all markets, then you would see the gold technical setup as very bullish…[as] the economic fundamentals in the economy are weakening…

Summary

  • …Technicals of the market point to another substantial leg up.
  • Economic fundamentals also appear to be lining up with sentiment building in the gold technical charts.

Time will tell where we ultimately land in 2019 – a gold head fake, or recognition once again of gold’s pivotal role in the very volatile, debt-based financial system we live in today.

Editor’s Note: The above excerpts* from the original article have been edited ([ ]) and abridged (…) for the sake of clarity and brevity. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)

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