Looking at the Weekly chart of Gold
, we can see a descending triangle
formation, the base of the pattern has been broken only to reverse back, and now we're getting another breakdown. This is a key moment for the long term gold
outlook, if we break the recent lows, the pattern will be officially broken, and as such the basic projection will be a drop to around the $900 per ounce area. This may be a very plausible drop if we get more good data from the US coupled with hawkish fed statements leading to a rate hike in mid 2015.
Alternatively, if gold
does not break the lows, but rather trades higher, the fake breakout may be construed as a short as a squeeze of the last buyers before starting a big move higher, projection wise towards the 1550 support and resistance
area. This scenario is certainly plausible, as the US economy may start to falter in 2015, which may induce the Fed to reverse course back to dovishness and potentially QE4 initiation.
Either way, it is an important time to follow gold
on a longer term time-frame, so as to assess the direction for the next couple of trading years.