A few weeks ago I showed you an awesome setup developing for Gold.
Just like when you bake a cake, there is a time that is just right to take it out of the oven, let it cool and dig in.
This pattern has been baking for over a year. At the time I recorded a video explaining why I thought Gold was setting up for a nice prolonged move to the upside coming out of what is called an inverse head and shoulders chart pattern. I recorded a video explaining how the gold miners chart was setting up.
Today is a great time to look at the progress to see if the pattern has continued to in our favor.
The way an “inverse head and shoulders” pattern works is when the price hits a low point which forms the left shoulder, then stages a rally.
The next move is down again to a slightly lower low, then rallies right back to the previous high. Now we have the head developing. The right shoulder is formed with another move down, but this time to a lower high, and back up again. Now we have the makings of the pattern, then we look for the “trigger point.” This occurs when price rises above the “neckline” which is the point of the two previous rallies.
If gold can rally above the neckline, we’ll have lift off, most likely for a multi month run in the yellow metal.
The most likely scenario for this to occur is within the next two week according to the technical chart pattern and the cycle low due for gold happening now.
It’s not out of the ordinary to see some additional backing and filling before lift off. These pull backs would be considered buying opportunities for long term gold investors as long as the larger pattern stay in tact.
Here’s a review of today’s markets –