price bar - tag category postings

Another look at the yearly price bar chart of gold shows us that gold has been in a massive long term channel. This piece of information is very important because it shows us what needs to be accomplished for gold to really set itself ‘free’.

This is really a great long term gold chart. It is a yearly price bar chart of gold that in one glance gives you a pretty good perspective on the old bull market and where we stand right now. The first statement that needs to be made about this long term gold price chart is that we can clearly see that we are still constricted within a very long term trading range. The aggressive move upwards of the last 3 or 4 years in gold was a swing reaction upwards from the lower slanting support line. Despite all the excitement over gold, the fact remains that gold is still within this long term trading range and has not yet even broken through it. This tells me that the real bull market in gold has not yet even begun! A very surprising observation.

Look carefully at the top slightly down slanted blue line. This resistance line has now been touched (or attacked if you will) for the 3rd time. It is somewhat common for resistance levels to be broken on the 3rd try. As you can see from the most recent yearly gold price bar, it has held up quite well relative to the last attack on this resistence line in the mid 1980’s. Right after the attack of resistence in the mid 1980’s, the yearly price bar slammed down violently showing excess supply in the market. So far this year (half way into the year) price has not had such a violent downwards reaction. It has held and stayed above 420 which is also an intermediate support level. The longer the price bar hugs right under the long term resistence line, the greater the case can be made that we are probably in for a huge upwards breakout.

Keep in mind however that there are still 6 months left in this year. The last 6 months of this year will determine the closing price of that yearly price bar. Either the price bar will stay just the way it is with a small range, or it will reverse downward very quickly similar to the mid 80’s, or it will continue higher breaking through the long term resistence line creating the ultimate gold breakout.

IF the gold market is going to chose the 3rd option (the upwards breakout into the end of this year) then in order for the breakout to be valid, it will be necessary for the price range to be very long. A long price bar will be needed to validate the breakout if it occurs.

In my next post, I will put up what I consider to be probably the most important price chart for the year 2005.

Thomas