The yellow metal has surprised many with a lack of upward movement. Our chartist searches for a catalyst.
Our first analysis this year covered gold, proposing movement to $1,602. At the time of writing, the metal was trading at $1,552, thus the proposal was fairly significant.
Literally within the week, the metal successfully oozed upward, hitting and slightly exceeding our target level.
Crucially, the price did not actually close a session anywhere near our $1,602, therefore opening the doors of suspicion for the immediate future.
One good thing which came out of the movement to $1,602 was fairly basic and simple.
It proved we've been watching the correct trend, suggesting mapping the price against the blue trend line (dates back to 2011) has been the correct approach.
But in light of a barrage of reports from China, we're more than a little surprised the price of the metal has not shot upward, thanks to gold (once) being regarded as a natural safe haven.
The immediate scenario with gold is somewhat surprising.
Weakness now below $1,555 (red) threatens reversal to an initial $1,530. If broken, our secondary calculation is at $1,500, along with a fair chance of a bounce.
The surprise against these numbers? It will return the price of the metal below the long term downtrend!
Alternately, if the metal now finds itself trading above just $1,600, strength to $1,645 now looks possible with secondary, if bettered, coming in at $1,685.
We're pretty hesitant, suspecting the price shall go up, surprised it has not already done so. Our in-house mantra remains, "if it ain't goin' up, it's goin' down," with the result the near-term red uptrend is probably worth keeping an eye on.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.
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