Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold, No Bearish Head and Shoulders Pattern

Commodities / Gold and Silver 2010 Nov 29, 2010 - 05:03 PM GMT

By: Jordan_Roy_Byrne

Commodities

Best Financial Markets Analysis ArticleIn the past week I’ve seen more than a few mentions of the potential head and shoulders pattern in Gold. A head and shoulders pattern occurs when a market forms three peaks and the middle peak is noticeably higher than the left and right peaks. However, that is not enough for the pattern to play out as projected in the textbooks. There are other important characteristics of this pattern, which many technicians ignore or are unaware of.


A real head and shoulders takes months not days or weeks to form. It is a reversal pattern so there is a long period of distribution as the pattern begins its setup. In other words, this pattern occurs at major market tops and bottoms. In a typical market, the pattern occurs only once or twice every ten years.

A perfect example is the 2007-2008 top in the S&P 500.

As you can see from the chart below, there are some important characteristics. The pattern takes a while to develop (at least a year), the pattern comes after a long uninterrupted rise and momentum will begin its divergence before you even realize the market is beginning to top.

Presently, Gold has no chance of being in a head and shoulders pattern. Momentum just peaked two months ago, the market remains well above the moving averages and most importantly, the market has only been rising in uninterrupted fashion for a little over a year. The market may seem like it could be forming the pattern (as we highlight in the chart) but if it doesn’t fit any of the above characteristics, then there is no need to worry about a reversal.

In fact, in the larger picture, Gold is still in the early stages of a super bullish phase in which it could reach $2,000/oz in the next six to nine months. In past commentaries, we’ve noted how bull markets tend to begin their acceleration around the ninth or tenth year. Note in the chart what happened when Gold broke above channel 2. Even after a strong run to $420 to $500, Gold accelerated to $730. That was a 46% rise in only a few months.

Gold has already broken above channel 3 and only has small resistance left with channel 4. Moreoever, at the bottom of the chart we show the market’s distance from both the 80 and 40-week moving averages. Relative to past peaks, Gold still has room to run. Additionally, since the market is likely entering its most bullish phase, we could see new highs as far as the market’s distance from the 40 and 80 week moving averages.

Of course nothing is certain. We only deal in probabilities and reality. The reality is that Gold is in a major bull market. Its highly probable there is no head and shoulders pattern. Judging from our evidence, there is a good chance that Gold is in an accelerating mode. Sure, Gold could drop $50 or $75. My advice is to leave that to the traders.

The big money will be made in riding this bumpy trend to its zenith. George Soros, Jim Rogers, Warren Buffet and others have made their money by sticking with trends for a very long time. That is why we are sticking with Gold. Yet, in our service we seek to help investors and traders in managing their risk and riding what will be a very bumpy but spectacular bull market. For professional guidance in riding this turbulent but profitable bull market, consider a free-14 day trial to our premium service.

Good luck ahead!

Jordan Roy-Byrne, CMT
Jordan@thedailygold.com
http://www.thedailygold.com/newsletter

Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in