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The charts are displaying new strength in gold and
silver. We will see new highs in gold and silver this year. It’s not
too late to buy the precious metals at bargain prices.
Technical analysis is a powerful tool for
understanding the market for a traded good. Technical analysis employs
time-tested techniques for predicting future price levels. The successful
technical trader uses a combination of indicators to support the decision to
take a long or short position in a given commodity. The planets are lining up
in favor of another leg up in gold and silver. Let’s examine what the
charts are telling us about gold today.
First, gold has broken out of a bullish falling
wedge chart pattern dating back to September 2011. The falling wedge pattern
can be a continuation or a reversal pattern. It this case, it is a reversal
pattern, signaling a reversal of an intermediate bearish trend. The falling
wedge is a bullish pattern that begins wide at the top and narrows as prices
gradually move lower. This price action forms an extended cone shape that
slopes down as the reaction highs and reaction lows converge. The pattern is
defined by the down-sloping upper resistance line and the lower, converging
base support line. The bullish breakout occurs when price action closes above
the resistance line (upper descending tend line) with confirming volume. The
point count for the pattern is calculated by adding the magnitude at the
widest span to the price at breakout.
 
We can see the falling wedge reversal pattern in the
daily basis chart for April COMEX gold above. The intermediate bearish trend
began in early September 2011. The price at the break above the resistance
line was 1674.40. The point count is 321 which sets
the price target at $1995/oz. The breakout is confirmed by significant volume
at the breakout day, January 25th.
We can see the same breakout in gold using Ichimoku Kinko Hyo indicators.
Here we see spot gold on a daily basis with Ichimoku indicators. The January 25 breakout above
resistance on higher volume is highlighted in the oval. Today’s chart
shows all Ichimoku indicators are bullish for gold.
Price action is above the cloud, which is bullish. The Tenkan
Sen made a bullish cross (from below) the Kijun Sen back on January 17th.
The projected cloud is bullish (shaded green). And the Chikou
Span is well above price action and above the cloud, which is a strong
bullish signal.
Silver is displaying similar bullish patterns and
indicators. So are selected gold and silver stocks. Now is the time to own gold
and silver.
Investors from
around the world benefit from timely market analysis on gold and silver and
portfolio recommendations contained in The
Gold Speculator investment newsletter, which is based on the principles
of free markets, private property, sound money and Austrian School economics.
The question for you to consider is how are you
going to protect yourself from the vagaries of the fiat money and growing
inflation? We publish The Gold
Speculator to help people make better decisions about their money. Our
Model Conservative Portfolio has outperformed the Dow and the S&P 500 by
more than 3:1. Subscribe at our web site www.thegoldspeculatorllc.com
with credit card or PayPal ($300/yr) or by sending
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