Technical analysis: Rand gold price ends bear trend

Comment on this story

Johannesburg - A significant event has recently occurred on the rand gold price as it has broken out above an 18-month resistance line, to effectively end its bear trend. It now has a far higher target in place (but not in the short term). This implies either the gold price to rally or the rand to weaken, or both.

Rand gold price: Bullish break-out.

Recommendation: Buy after a correction.

Trend: Up in the short and medium term but overbought.


- The rand gold price has broken out above long-term resistance (line 2). Lines 1 and 2 form a massive broadening formation. The price has almost reached its first target based on a break-out of pattern 3-4 (a broadening formation as well).

- Its weekly stochastic oscillator (on top) is overbought and giving a negative divergence there. This is a warning of a correction to come before heading up again.

- Because it almost reached its short-term target (R14 900 an ounce), rather wait for a correction to R14 000 (near line 4) to buy. It can be traded directly via Newgold on the JSE.

- Its larger target now (target 2) is R16 900, based on the height of pattern 1-2 projected up. This is a target for the medium term and beyond.

- Place your stop-loss as a weekly (that is, Friday) close below R13 200 an ounce when buying after the correction.

* Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend his courses, please go to

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines