This formation, if activated and valid, would target gold to a much higher level than the previous high.
Let's see how this develops. I will be tracking both this and my normal scenario obviously. Both are bullish but this alternative view promises a wilder ride.
The similarity between the big accumulation-liquidation cycle and the previous cycle from March to July is remarkable in many details.
That does not necessarily mean that the next move will be of the same magnitude. But if that pattern holds we get a target of between $2,800 and $3,000 for the next leg up.
I would wait for this to unfold therefore and strongly advise that you not try to get ahead of it. Any successful trader would gladly give up the first ten percent of the next bull move to wait for confirmation to make sure, as Bernard Baruch used to say among others. The first level of key resistance is $1620.
Once the current decline is over and the positions have been liquidated, market participants will be sitting on their piles of paper in fear and trembling of what comes next. And 'what comes next' is the key variable. Will it be a continuation of this pattern, or a repetition of a series of formations in complete recycle?
That is hard to see now, and what might provoke it. Will it be a major quantitative easing in the dollar and euro, or a further liquidation and collapse in the banks and stock markets?
I would prefer a measured bull market move higher, but we must carefully observe and accommodate the changes in the structure of world currencies and the evolution of what we call 'money.'
This is a major engagement in what we have come to call The Currency Wars.
