Goldtent TA Paradise

I was starting to think that gold’s price action is not so well expressed by the two pitchforks that I have been watching since January 2016.

Right now, gold price has dived out of the small blue pitchfork after failing at its centre line. Note that gold previously broke out of the top of this fork during its brief period over $1310, which now looks like something similar to a kind of island topping formation.

Price is headed towards the bottom line of the big black fork at $1120. Below that, the bullish trading of the past year is over. However a washout to this $1120 line would need to see a strong bounce back towards the highs to keep this bullish fork in play. The price never actually reached the top of this fork on the previous rally.

Something that interests me as I look at it today is that the collapse in prices from $1280 started right at the point where the median lines of the two forks meet. I mentioned this point some weeks ago as perhaps an important juncture to watch out for and now it is crystal clear that is the site of a big bearish move. Is it going to turn out to be the site of the end of this bull market?

It is also instructive to compare the gold moves on Brexit and Trump. the bullish Brexit move took off from the centre line of the black fork (coincidence?) in late June 2016.

The Trump move in November 2016 had a fake-out move up from the centre lines of both forks! That was followed by the recent huge reversal to the downside.

Maybe these forks are still in play. If so, then $1120 is crucial and it looks almost inevitable as a target now. Perhaps the only thing that mitigates against $1120 as a target is the fact that gold did not reach the top of the black fork on the 2016 rally, so $1120 is not such a clear target from an action-reaction line perspective.

Action-reaction lines in the chart below around the black pitchfork median line would give action line $1377, median line $1277 and reaction (target) around $1177, where gold is now (approximately).

Fascinatingly, Brexit was the action and Trump was the reaction.

Actually, I have not really drawn the reaction line quite in the right place, but drew it only for illustrative purposes. The reaction would go to $1177 if it took the same length of time with respect to when the price crossed the median line. However, a faster reaction as we seem to be having could take the price to around $1150.