In last week’s column we showed the rand gold price (Newgold), this week we’re looking at the dollar gold price. After a multi-week drop, it is now showing signs of rallying again. Its chart is, in fact, pointing to higher levels.
GOLD ($) – New bullish signs
Recommendation: Buy or add to holdings
Trend: Short term sideways. Medium term up. Long term sideways to up
Strategy: Traders buy. All others add to medium/longer-term holdings.
n After reversing down off an important resistance zone (at lines 3) in October, the gold price fell to line 4, and then gave a classic bullish reversal candle up two weeks ago (see circle). This is a sign the gold price wants to go up again to attack line 3.
n The weekly Stochastic Oscillator (on top) is also turning up from an oversold level, which is a bullish sign.
n Traders buy. Medium and longer-term players should add to current holdings.
n Look for a retest of the support zone at lines 3 ($1 783 to $1 795). But a breakout and close above $1 795 on a weekly (ie a Friday) closing price will be important, and send the price to a new high at Target 1 at $1 940 (based on a large triangle formed by lines 1 and 2).
n Further potential will be to Target 2 at $2 060, based on the height of a channel formed by lines 1 and 3, projected up. This not short term, rather medium term plus.
Colin Abrams, an independent technical analyst. To subscribe to more recommendations by the author or attend his courses, please go to www.themarket.co.za