Daily Triangle and Flag Targets for Gold Oct 8

Oct 8, 2009: 12:26 PM CST

Let’s take a quick look at the daily chart of Gold to note a recent “Bull Flag” pattern, and also revisit the “Triangle” breakout pattern that triggered as a potential set-up in early September.  We’ll note two potential upside targets if these are the dominant technical price patterns in gold.

Taking a quick look at these two patterns, let’s start first with the “Bull Flag” that is playing out currently.

The “impulse” or “pole” of the flag began near the $940 price, which was the breakout of the larger triangle.  The “flag” or “retracement” move occurred through most of September, and now in early October, we are getting the “Measured Move” of the trade that triggered an entry as the upper trendline was broken as price crested back above $1,000 per ounce.

For a price projection target, we take the “impulse” which is roughly $60 and then add that to the breakout point of the flag which occurs near $1,000 per ounce.  Thus, $60 plus $1,000 gives us $1,060 for a “bull flag” price projection target which is almost complete.

Beyond that short-term target, we have the larger “2009 Symmetrical Triangle” in gold as shown above.  To get a classical price projection from this pattern, we take the height of the triangle (from $800 to $1,000 which is $200) and then add that to the breakout zone near the apex (convergence) of the trendlines in the triangle at $960.

This gives us a potential “triangle target” of $1,160 to the upside to watch.

Stop-losses for the triangle would be placed under $940, or trailed upwards depending on your strategy as price continues higher to lock in profits.

Higher prices in gold are consistent with my prior post on silver where I noted there were “Fibonacci Confluence Clusters Overhead at the $18 Level.”  Silver now trades at $17.50, and price has risen near the target I mentioned since I posted the $18 target on October 5th.

Continue watching both gold and silver, and the expected potential targets as outlined above (using classic analysis).  If price breaks through them, it would be a strong bullish omen, though a slight retracement or pullback at these levels would be expected.

With all this bullishness and media focus on higher gold prices, I can’t help but say that any sort of unexpected down-move in gold would come as a surprise to so many traders, and could accelerate if these expectations are unfulfilled and stop-losses get triggered.  No sign of that happening yet though.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade


4 Responses to “Daily Triangle and Flag Targets for Gold Oct 8”

  1. tgarfield Says:

    Gold also trades a lot of places besides the US. I was looking at charts of gold in other currencies. It is more3 a straight accending line in most of them. I think somehow analysis in gold needs to somehow account for the buying that will occur in other countries.
    I have a chart here.

  2. terlyn Says:

    I see that gold hit 104.1501 on Oct. 8, 2009, and today, Oct 13, so far hit a high of 104.13. I'm wondering if this might indicate a reversal to come.

  3. terlyn Says:

    I had this post in my head as GLD kept bumping against the 106 price target. That has remained a strong resistance. Good call.

  4. terlyn Says:

    I had this post in my head as GLD kept bumping against the 106 price target. That has remained a strong resistance. Good call.