You guys know I am not a massive fan of charts, but I do take a look at them from time to time and one area where I have had some success is charting gold and silver. For some reason they seem to respect support/resistance and the bands of up trends/down trends quiet nicely. I don't post many of these calls on this blog, but if you are interested you can check on my youtube channel.
Any way I thought I would post a chart today because gold has been moving in this triangular or wedge shaped patten for the last couple of weeks. This has been characterised by higher lows and the inability for gold to break out of the upper band of its long running up trend around $1,700. In last nights session it broke to the downside which suggests to me that its low of around $1,530 may be tested or alternatively the lower band around $1,500.
If gold can then bounce strongly off this lower band then I think it will be very positive as it will have confirmed that the long term up trend remains in tact (from a technical view) and it can then continue its long sustained run up without getting ahead of itself and going parabolic.
Why is this important for me? When I own one gold stock at the moment, KGL, and have a close eye on a couple of others. A short term drop in the price of gold could result in some weakness in the share price providing a good opportunity to enter certain stocks.
Please let us know your thoughts and as always please do your own research and consult a licenced financial advisor.
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