Gold At Major Trendline, Miners Breaking Out
by Taki T., Gold Silver Worlds
This is a huge development in the gold space. Even if you are not a big fan of chart analysis (like the detailed analysis on our reference site www.ChartAnalyst.expert), you simply cannot ignore the long term trend on the gold chart. The first chart below is the weekly gold chart. It exhibits a major trendline (red line) which provides tremendous resistance since mid-2012. Combined with the horizontal support around $1150, there is a long term descending triangle formation.
As the chart shows, the descending triangle is about to resolve. Gold will experience a breakout or a breakdown soon. Based on the chart pattern, we can imagine that it can take a couple of months until a critical move higher or lower, but it will never take more than 3 to 4 months. So 2015 should become a “make or break year” for gold, clearly.
From a technical point of view, the PMO indicator (DecisionPoint Price Momentum Oscillator) has been trending higher since last July. This indicator is a relative strength indicator, and it indicates the rate of change of the price.
With a strong dollar, and a coming resolution according to the gold chart, it feels like gold could be derailed in the not so distant future. However, when zooming in on a very short term chart of the GLD (a proxy for the gold price), it seems that a possibility of an upside breakout should not be excluded. The next chart indicates how GLD has bounced off short term support and started trending higher. It looks like a bullish flag is in the making.
The most interesting outcome would be that gold would start rising along with the U.S. Dollar. If that were the case, it would be indicative of exceptional strength. It really is no coincidence that gold miners (represented by GDX ETF) are also at a major resistance zone, as indicated by the last chart (see blue horizontal line). The GDX chart signals a breakout is very likely, as miners have a habit of leading the metals. If GDX closes the coming week higher, we will have a confirmed breakout, which would be very good news for the metals.