-- Posted Wednesday, 1 February 2012 | Share this article | Source: GoldSeek.com

By Stephan Bogner

Between 1980 and 2000, the gold price movement was dominated by the blue triangle, whereas a so-called BREAKOUT started already in 1993 when breaking above the upper-most blue triangle leg at approx. $350. For the next 6 years until 2000, the price did a so-called PULLBACK which went all the way to the apex of the blue triangle at approx. $250. Thereafter, the so-called THRUST occurred which is the final movement of a triangular price formation. This thrust to the upside is active ever since as moving healthily along the long-term green upward-channel. Additionally, it is valued strongly bullish when the price succeeds in breaking above the upper-most (green) trend-channel as thereafter, a new mid-termed strong upward-trend is typical. After the successful breakout above the green (and violet) resistance at approx. $1,300 in late 2009 to $1,900 in 2011, the price most recently completed a classical pullback to the upper-most green trend-channel at approx. $1,550 – in order to test and confirm this year-long resistance as new long-term support. A sell-signal is not given until breaching this support – hence, a strong and long-termed buy-signal is active at the very moment respectively since holding at the supportive green-violet intersection at approx. $1,550.

If solely taking the thrust since the beginning of the new millennium under consideration, one can clearly observe the price moving within the green trend-channel until 2011 – at which time it began a sharp breakout from approx. $1,550 to $1,900, whereafter a pullback occurred which trended beneath the red resistance. Recently, a breakout above this red resistance was managed hence generating a first buy-signal. A sell-signal is generated when breaching the red or green support currently at approx. $1,650. As the breakout may be still ongoing, one must expect a pullback to the (red or green) support any time – as a final thrust mostly occurs after a notable breakout and pullback.

The perspective since October 2009 shows that the price tends to rise strongly after breaking above the red resistances – which bullish action occurred recently again when rising above the red triangle leg at $1,700. Additionally, the price tended to fluctuate along the green triangle, whereas numerous breakouts and pullbacks were tried in late 2010 and (mostly) successfully undertaken since April 2011. As the price breached the green triangle legs (and the grey 260-day moving average) in the end of 2011, another pullback to the green triangle-apex is likely. Yet, a buy-signal dominates at the very moment as the price succeeded in breaking above the red triangle leg recently and a breakout is in the making at the very moment. However, a pullback may occur any time which is likely to test and potentially confirm the formerly red resistance as a new support (sell-signal when breaching it). A sell-signal à la thrust to the downside is generated when breaching the lower-most green support currently at $1,600.

On the other side, the U.S. Dollar Index (USD) devaluates since 1983 along the blue trend-lines. Additionally, the below chart simultaneously shows a blue triangle out of which a breakout occurred from approx. 92 to 122 points between 1997 and 2002, whereafter numerous pullbacks to the blue triangle-apex occurred until late 2011. Since then, the USD began to rise indicating a thrust to the upside. However, a next distinctive buy-signal is not given until breaking above the red and blue resistances currently crossing eachother at approx. 82 points – hence, a sell-signal may be given shortly when having reached these resistances.

The perspective since 2008 shows that the USD recovered above the green trend-line currently at 79 points. As having landed on this support recently, a buy-signal predominates at the very moment. However, a strong sell-signal is generated immediately when breaching both the supportive (light and dark) green trend-lines at 79 points. More definite buy-signals are given when rising above the blue resistance at approx. 79.8 points and the green resistance at 81 points.