Originally published by Guppytraders.com
The defining feature of the gold price chart is that its taken so long to go nowhere. Gold appears to have slipped into a zombie state, largely unmoved by changes in the US dollar, interest rate predictions or any world crisis.
Gold shows weak trending activity and poor support levels. There are short term trading opportunities but the chart is a long way from the more optimistic Goldbug predictions to a return to previous highs above $1600.
Gold has traded in a broad trading band between $1210 and $1350. The breakouts above $1350 in 2016 July, and more recently in 2017 September proved to be weak. There was simply not enough strength in the trend to keep prices above the $1350 level.
The current consolidation near $1350 offer a little more hope but its not a strong breakout. The consolidation activity is not using the $1350 level as a support level and this is a bearish signal.
Despite this weakness there are two bullish features in the chart that suggest a slow breakout may develop. The first bullish feature is the way prices has generally clustered in the upper half of the trading band since 2017 September. The gold price has not tested the lower edge of the trading band near $1210 since 2017 July. This gives an upward bias to the price activity.
The second bullish feature is the steady separation in the long term group of averages in the Guppy Multiple Moving Average indicator. This shows a reasonable degree of investor buying.
This is not a strong trend. In 2017 December the price dropped below the long term GMMA. This shows that GMMA investor support is not strong. The danger is that the GMMA will not act as a support level if there is a pullback in the gold price. This is why the uptrend is weak.
Currently there is a high probability the gold price will retreat from $1350 and retest support around $1290. This is the short term outlook and it offers short term retreat and rally trading opportunities.
We use the ANTSSYS trade method to extract good returns from this behavior.
The long term outlook is mildly bullish. The general upwards bias in the gold price starting 2017 January suggests a weak and slow uptrend with a long term target near $1490. This is a six to twelve month outlook. This target is calculated by measuring the width of the trading band and projecting it upwards. A rise to this level is most probably a slow and unstable move with many tests of GMMA support.
Daryl Guppy is a leading international financial technical analysis expert and special consultant to Axicorp. Guppy appears regularly on CNBC Asia and is known as "The Chart Man". Disclaimer: Daryl Guppy is not a financial advisor. These notes are for educational purposes only and provide an example of applied technical analysis.