Friday 12 June 2009

Sleepy medium-term "reverse head and shoulders" in gold

Looking at a 2-year daily chart -- courtesy of -- of GLD (a proxy for the gold spot price), I am seeing a clear reverse-head-and-shoulders chart pattern (suggesting the most likely outcome is a dramatic upward breakout in due course). I have highlighted it on the embedded chart image, using red arcs for clarity, and in the process a sleepy smile emerged.

My guess is that a pullback to around $880-$900 or so is in the cards short-term (like, "in June"?), followed by a significant breakout beyond the $1000 barrier-to-date beyond that in the latter half of 2009. Partly this call for a pullback to that area is for the sake of symmetry in the pattern, but also this roughly coincides with the 50-day moving average line (blue), and also a significant area of past support and resistance.

We'll see. Probably I'll be completely wrong and this will turn out to have been a "double top" pattern instead with hindsight. :-)

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