Gold has been in a consolidation structure, outlined by the green box, since the beginning of August. During these periods bulls and bears attempt to agree on a price, while providing the opportunity to accumulate / distribute existing positions. The range will eventually break either with trend (trend continuation) or counter trend (trend reversal).
The range is defined when price respects multiple tests of the top and bottom of the range (in this case, acting as both support and resistance). We have seen false breakouts of both the top and bottom of the range.
Within the range itself there are a couple of significant areas to watch.
1) The center of the range $1510 (Point of Control - Where most of the volume is traded. Choppy price action) Since price is below this line bears will attempt to hold this line as resistance, maintaining pressure to the downside. There is a second line within this consolidation area, which is more significant. The blue dashed trendline ( Channels supporrt
2) Confluence of strong resistance. $1525 (Blue dashed line, large channel resistance from weekly chart / Back test of black dashed line bullish trend-line / Channel resistance of bull flag). I would expect sellers to defend this level.
A quick look at the weekly.....
You can see the blue dashed line acting as channel resistance. Breaking above an ascending channel is difficult, but it does happen and would be considered extremely bullish. From looking at a lot of long term charts, when it does occur, the measured move objective is the size of the original channel (Creating a new channel twice the size). Looking at the charts below should show it's significance.
Long term gold chart, break above ascending channel and the final target 100% of original channel. Very clean lines for a 40 year chart.
The range is defined when price respects multiple tests of the top and bottom of the range (in this case, acting as both support and resistance). We have seen false breakouts of both the top and bottom of the range.
Within the range itself there are a couple of significant areas to watch.
1) The center of the range $1510 (Point of Control - Where most of the volume is traded. Choppy price action) Since price is below this line bears will attempt to hold this line as resistance, maintaining pressure to the downside. There is a second line within this consolidation area, which is more significant. The blue dashed trendline ( Channels supporrt
2) Confluence of strong resistance. $1525 (Blue dashed line, large channel resistance from weekly chart / Back test of black dashed line bullish trend-line / Channel resistance of bull flag). I would expect sellers to defend this level.
A quick look at the weekly.....
You can see the blue dashed line acting as channel resistance. Breaking above an ascending channel is difficult, but it does happen and would be considered extremely bullish. From looking at a lot of long term charts, when it does occur, the measured move objective is the size of the original channel (Creating a new channel twice the size). Looking at the charts below should show it's significance.
Long term gold chart, break above ascending channel and the final target 100% of original channel. Very clean lines for a 40 year chart.