Wednesday, 1 August 2012

Gold retests triangle's upper trend line following last week's bullish break

Earlier today I tweeted about a potential double bottom set up on the hourly chart. Right now I would be surprised if that double bottom holds. I've been surprised many times before. In any case, the following chart shows the triangle retest that I mentioned in the tweet. It also shows the recent bullish cross by the 18 and 40 day moving averages.

Zooming out to the past two years of daily chart action we see that the 18 and 40 day moving average combination has been an effective indicator of Gold's trend at this time frame. Effective does not mean infallible, for example the recent bullish cross in June did not lead to a sizeable move. At this time a move by Gold below the 40 day moving average would likely indicate the end of the current infant up trend.