The Daily Triangle Strangle in Gold – Higher or Lower

Feb 13, 2010: 6:48 PM CST

There are converging trendlines evident on the daily chart of gold, and I thought that structure would be worth a closer look.

Here is a quick ‘chart view’ of Gold’s daily ‘triangle:’

Starting with the July lows and connecting those in August and February, we see the lower trendline as drawn, which ends at the $1,070 level.

It’s worth noting that – although I didn’t show it – the $1,050 level is the 61.8% Fibonacci retracement of the July lows also – and a long-legged doji candle formed at that level prior to the recent rally into EMA resistance.

Speaking of resistance, we have the declining 20 and 50 day EMAs residing at the $1,100 level (where price is now, as it forms another doji at resistance).  Interesting.

Now, we can draw an upper trendline as such that connects recent highs, which ends at the $1,100 level.

The result is a strange triangle shape, which is moving towards an ‘apex’ or breakout point at the $1,090 area.

That’s the quick analysis on the market – and Adam Hewison also discussed this compression in a short video entitled:

Will Gold’s Next Move be Higher or Lower?

Adam often keeps his video analysis quick and simple, using basic technical analysis as such:

Adam actually starts the lower trendline at the November 2008 lows just above the $700 level, making this a very important trendline to watch.

Adam also notes the three “Trade Triangles” of the Market Club (of which I am an affiliate member) to indicate that the Monthly trend clearly remains higher, the Weekly trend – peaking at the $1,200 level – is down – but he shows the daily triangle as recently turning up.

I would suggest keeping attention at the $1,050 area as support, with any break suggesting further downside yet to come, and $1,100, with any upside break suggesting further upside moves to challenge $1,150 and perhaps beyond.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

2 Comments

2 Responses to “The Daily Triangle Strangle in Gold – Higher or Lower”

  1. TheYenGuy Says:

    Cory, thanks for another great and timely article.

    Gold broke out this week rising from $1,075 to close at $1,093 as a Treasury auction failed and the yield curve strengthened; one can read the extensive evidence and view the supporting charts using this link:
    http://tinyurl.com/yf5juqp

  2. TheYenGuy Says:

    Cory, thanks for another great and timely article.

    Gold broke out this week rising from $1,075 to close at $1,093 as a Treasury auction failed and the yield curve strengthened; one can read the extensive evidence and view the supporting charts using this link:
    http://tinyurl.com/yf5juqp