AFTER consolidating sideways to down for the past year, the dollar gold price has broken out above a key resistance level, and is setting up for an eventual retest of its all-time high
Gold ($): Important breakout.
Recommendation: Buy pullbacks.
Trend: Short term up, but overbought. Medium term up.
Strategy: Traders buy pullbacks on an ongoing basis.
n A sharp rally over the past week has caused a breakout above line 4, of a large 12-month triangle with line 1. This “officially” ends its 12-month correction, and points to a far higher target to come.
n The short-term stochastic oscillator (on top) is overbought, so a minor pullback is likely at any time. Pullbacks are to be bought.
n Subscribers were advised to buy on the breakout above line 3 in July. The $1 700 first target (target 1) has now been reached, but pullbacks remain buyable, for example if it pulls back to $1 690.
n Medium-term (and longer) players should keep holding through short-term pullbacks.
n The next target here is line 5 ($1 775). But it now has a larger target (target 2) of $1 940, based on the height of triangle 1 to 4 projected up. That will be a new all-time high.
n If buying on a short-term pullback, place your stop loss as a close below $1 660.
Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to www.themarket.co.za