Time For Gold To Rest
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
All markets go through the same three phases on a regular basis, no matter what time frame you are watching. For most, we watch the longer time frames, but whether you trade a five-minute chart or a weekly, the same three phases are always there. Because all charts are the same, all patterns repeat, and the shortest time frame always resolves into the longer one.
What we saw in gold on Thursday was known as a blow-off, where price and time were meaningless, the buyers had to buy and didn’t care what price they paid. This action typically takes place at the end of a cycle when panic buying or selling come into the market.
The blow-off appears to be complete and gold will do one of the following: sell off to a new level of support, consolidate around the $1,400 level or break down and reverse trend. Based on what we are seeing, the most likely scenario is for gold to consolidate and for the rally to continue.
Gold has broken out in all time frames and is on six-year highs. At the same time on a weekly chart, it is forming a cup-and-handle pattern, which is one of the most bullish. Expect gold to consolidate before resuming to the upside; our new target is $1,500.