http://www.usagold.com/publications/2012augsp.html
Snippet:
SPECIAL REPORT
August, 2012
by Peter Grant
Gold Technicals Portend Impending Breakout
Similar chart patterns in seven major currencies
signal potential for resumption of secular bull market
Ah, the long, lazy, hazy days of summer: Here in Colorado, it's been a particularly hot and dry one, leading to one of the worst wildfire seasons in recent memory. As for 'lazy', that's a pretty apt description of the gold market, which has been confined to a range of just $66.36 since the summer solstice.
Now, summer doldrums are actually quite common in the gold market. And as we like to remind our clients each year; historically speaking, the doldrums more often than not are an ideal time to buy gold, with about 2/3rds of average annual gains in the market over the past ten-years coming after the month of July.
Perhaps these doldrums just seem more...well, dull...because the market has been locked in a broader nearly $400 range going back to September of last year, when you may recall the market established its all-time high at $1920.50 and then promptly fell to a corrective low at $1534.06. The latter was modestly exceeded ahead of year-end with the 1522.40 low, but for all of this year, we've been relegated to an ever-narrowing range.
It's worth noting that last year's price action was the exception rather than the norm; with gold rallying strongly throughout the summer months, before succumbing to corrective/consolidative pressures into year-end. Yet, this year appears to be setting up for a possible reversion to more "normal" seasonal influences.
As a market technician by trade for many years, when I see a protracted series of lower highs and higher lows, I think I start to salivate a little. Triangle patterns — sometimes also called coils — are a classic (and reliable) continuation pattern; as are the closely related wedge and flag patterns. We've made note of such patterns on a number of occasions over the years, and several are highlighted in this post from 2009.
Continuation patterns tend to break-out in the direction of the underlying trend as the apex of the formation is approached, and as Mike Kosares pointed out in a recent article, gold pretty clearly remains in a long-term secular bull market.
I actually quite like the term 'coil' as it accurately describes how the market compresses and builds energy like a coiling spring. Frequently when that energy is released, the resulting moves can be quite dramatic to say the least, which is why it is generally a good idea to get on-board during the coiling process, rather than to wait for confirmation of the breakout.
The following daily chart shows the nearly year-long consolidation pattern in the yellow metal. However, the broader perspective provided by the subsequent weekly chart, clearly displays the attributes of a continuation pattern.
Gold - US Dollar Dailyhttp://www.usagold.com/publications/...AUUSDdaily.jpg
Snippet:
SPECIAL REPORT
August, 2012
by Peter Grant
Gold Technicals Portend Impending Breakout
Similar chart patterns in seven major currencies
signal potential for resumption of secular bull market
Ah, the long, lazy, hazy days of summer: Here in Colorado, it's been a particularly hot and dry one, leading to one of the worst wildfire seasons in recent memory. As for 'lazy', that's a pretty apt description of the gold market, which has been confined to a range of just $66.36 since the summer solstice.
Now, summer doldrums are actually quite common in the gold market. And as we like to remind our clients each year; historically speaking, the doldrums more often than not are an ideal time to buy gold, with about 2/3rds of average annual gains in the market over the past ten-years coming after the month of July.
Perhaps these doldrums just seem more...well, dull...because the market has been locked in a broader nearly $400 range going back to September of last year, when you may recall the market established its all-time high at $1920.50 and then promptly fell to a corrective low at $1534.06. The latter was modestly exceeded ahead of year-end with the 1522.40 low, but for all of this year, we've been relegated to an ever-narrowing range.
It's worth noting that last year's price action was the exception rather than the norm; with gold rallying strongly throughout the summer months, before succumbing to corrective/consolidative pressures into year-end. Yet, this year appears to be setting up for a possible reversion to more "normal" seasonal influences.
As a market technician by trade for many years, when I see a protracted series of lower highs and higher lows, I think I start to salivate a little. Triangle patterns — sometimes also called coils — are a classic (and reliable) continuation pattern; as are the closely related wedge and flag patterns. We've made note of such patterns on a number of occasions over the years, and several are highlighted in this post from 2009.
Continuation patterns tend to break-out in the direction of the underlying trend as the apex of the formation is approached, and as Mike Kosares pointed out in a recent article, gold pretty clearly remains in a long-term secular bull market.
I actually quite like the term 'coil' as it accurately describes how the market compresses and builds energy like a coiling spring. Frequently when that energy is released, the resulting moves can be quite dramatic to say the least, which is why it is generally a good idea to get on-board during the coiling process, rather than to wait for confirmation of the breakout.
The following daily chart shows the nearly year-long consolidation pattern in the yellow metal. However, the broader perspective provided by the subsequent weekly chart, clearly displays the attributes of a continuation pattern.
Gold - US Dollar Dailyhttp://www.usagold.com/publications/...AUUSDdaily.jpg