Gold prices appear to be forming a type of symmetrical triangle consolidation as seen in both the daily and weekly timeframes as of July 26, 2009.  Let’s take a look and note critical support and resistance levels.

All eyes of course are focused on the $1,000 per ounce level, as a breakout there would most likely lead to a large price run-up in gold.  However, we’re not quite there yet.

The key levels to watch on a ‘wider’ basis are the $1,000 level (critical resistance) and the $850 level (which also reflects Fibonacci support - not shown).  A breakdown from $850 would lead to an almost certain retest of $700… but again we’re not there yet.

For now, a symmetrical triangle consolidation pattern is forming, which currently compresses price between $910 and $960.  The triangle is nearing completion and perhaps the ‘best’ play would be a clean break above the upper line to target a ‘magnet trade’ to $1,000, or beneath the lower line also to target a ‘magnet trade’ down to $850.

Until then, we are getting little guidiance from the 20 or 50 day EMA (in a consolidation phase, moving averages are virtually useless as support and resistance) so we focus on price highs and lows for clues.

For full analysis of the Monthly, Weekly, and Daily charts of Gold, including Fibonacci grids and possible Elliott Wave counts, please subscribe to our new “Weekly Intermarket Technical Analysis” reports (20+ PDF pages each Sunday at $47.oo per month), which also cover the 10-Year Note Price, S&P 500, Crude Oil, and the US Dollar index - noting trading opportunities, key levels to watch for targets, trade entries, and management, and a broader ‘macro-view’ of interrelated markets.

Corey Rosenbloom, CMT