-- Posted Tuesday, 27 March 2012 | Share this article | Source: GoldSeek.com

By Stephan Bogner

If taking the gold price since late 2009 into perspective, it strikes the eye that another consolidation (beneath a blue resistance after a light-green boom) started in August 2011. Such a sideways consolidation is also defined as a (blue-green/red) triangular price formation, whereas the (light-green) booms represent the final movements (out) of triangles (so-called “thrust“). In early 2012, the upper (blue) triangle-leg at approx. $1,700 was broken, whereafter the price spiked to the $1,900-level (so-called “breakout“) and subsequently fell back to the apex of the triangle (so-called “pullback“). As the breakout and pullback are completed already and the price just started to move up yesterday after having landed on the triangle-apex a few days ago, we now anticipate a strong and longer-termed thrust to the upside. Principally, the goal of a thrust is to break the high of the breakout ($1,793) and the triangle ($1,918) and transform them into new support – in order for a new and longer-termed upward-trend to start thereafter. A sell-signal à la thrust to the downside is not given until breaching the triangle-apex ($1,640), the 260-day EMA (currently at $1,620) and the green-dashed support (currently at $1,600).

Although the gold price commenced its new and long-term upward-trend in 2001, it were the price movements as early as 1999 that “paved the way to the upside“ (respectively sketched the green upward trend-channel). Principally, it is valued as a very bullish sign if the uppermost resistive (green) trend-channel is broken and successfully transformed into new support – as typically a new and strong boom commences thereafter. After the successful breakout in mid-2011 from approx. $1,600 to $1,900, numerous pullbacks occurred to the (formerly resistive) green trend-channel – in order to test and (potentially) confirm it as new support. This breakout and pullback took the form of a (blue-green) triangle out of which a thrust to the upside commenced recently. We anticipate a dynamic increase in price appreciation after rising and holding above the red resistance at approx. $1,800.

The silver price already fluctuated within a (green) upward-channel since 1997, whose uppermost resistance was broken in early 2011 at approx. $25 rising to the $50-level, whereafter pullbacks to the new (green) support currently at approx. $27.50 followed. Hence, a first buy-signal was just generated with landing and holding above the green-dashed support, whereas the price is expected to boom noticeable after breaking the red resistance currently at approx. $36.

The shorter-term perspective since late 2009 shows the silver price in consolidation mode (again) fluctuating within a red (parallel) trend-channel. Currently, silver trades at $32.80 and thus close to the 260-day EMA at $32.91 (strong buy-signal when rising and holding above).

Since 2008, the USD index slightly moves up within the dark-green trend-channel. Most recently, a sell-signal was generated with breaching the blue and dark-green support at approx. 79.50 points, whereas a strong sell-signal is given when breaching the light-green support currently at approx. 78.60 points and the 260-day EMA currently at 78.15 points.

Putting the USD index since 1983 into perspective, it becomes obvious that the greenback fluctuated within the boundaries of a (red-blue) triangle between 1987-1997 and that the breakout went from 92 to 122 points until 2002, whereafter numerous pullbacks forced the Dollar down to the triangle-apex at approx. 72 points. A buy-signal à la thrust to the upside is generated when rising above the upper (violet) triangle-leg currently at approx. 82 points, while an analog sell-signal is given when breaching the lower leg currently at approx. 75 points and especially the level of the triangle-apex at approx. 72 points.

rockstone-research