Gold Breaks Out – Target $1000

Jul 13, 2008: 12:05 PM CST

As mentioned previously, Gold prices broke out of a triangle consolidation pattern and now appear headed to their price projection target of $1,000 per ounce.  Let’s see how this is possible.

First, gold prices have clearly entered a consolidation pattern, no matter how you draw the trendlines.  Price swings are overlapping and truncating at closer prices as the swings narrow. The moving averages became flat and have now turned back to the upside in the ‘most bullish orientation’ possible.

Gold broke above the upper trendline around $900 per ounce, and then confirmed the break with a ‘throwback’ retracement that tested and held the rising 20 period moving average as well as the break-out zone.

The price projection estimate comes from the height of the triangle (roughly $100 per ounce – from $850 to $950) which is then added to the break-out point just above $900 per ounce which gives a price projection target – if the triangle is valid – to just shy of $1,000 per ounce, which would take price back to its all-time closing high, less than $40 away.

Whether or not we meet our target, gold prices appear to be rather bullish in this environment of economic uncertainty, so be sure to keep a watch on this precious metal, which is also known as a safety place for investment in inflation and uncertain times.

3 Comments

3 Responses to “Gold Breaks Out – Target $1000”

  1. Don Da Mon Says:

    Does the fact that the momentum didn’t go higher with the price indicate that this is weakening at this price?

    Is that typical after a breakout or prior to reaching the target?

    Doesn’t this indicate some caution is gold reaching the $1000 target?

  2. Corey Rosenbloom Says:

    Don,

    The target is based on rudimentary analysis based on the basics of a classical triangle formation, given that the longer time-frame of gold is in an up-trend. Not all targets are achieved, but the placing of targets gives us structure and goals, as well as a bias in how to trade.

    It is important to note the developing and lengthy positive momentum build as price formed the consolidation pattern, and that the current swing, and thus the current momentum reading, is not yet complete. I would expect that as the price continued to rise (if it did) then the momentum indicator – which is nothing more than the difference between a 3 and 10 exponential moving average – to rise. We’re ultimately comparing distance between these moving averages in an effort to understand momentum characteristics a little better.

    And, ultimately, it’s still all odds and probabilities.

  3. David Says:

    Hi Corey,

    Hope your well. I managed to get my own thinking aloud blog going ( link above ). There was talk about shorting gold over the last few days amongst some traders. My own analysis tells me not to consider shorting until your target is met.