Commodities
Best Financial Markets Analysis ArticleGold's technical's have been looking very promising in the recent past, but there have been two worrying developments over the past couple of weeks which suggest that we may be about to see a vicious shakeout rather than the breakout to new highs that so many are anticipating. One of these developments has been the very high number of advisors calling for an upside breakout on public website's, as many of you will be aware, and the other is the trend of COT data, with the latest figures being at levels that have in the past almost always signaled a reversal to the downside.
On the 3-year chart for gold we can see that the giant pattern which has developed in gold following the highs in March of last year can be interpreted as a bullish cone-shaped Cup & Handle consolidation pattern, or as a Head-and-Shoulders consolidation, or both at the same time, either or both of which imply an upside breakout soon. Negatively, the entire pattern can be interpreted as a Double Top. On the basis of this chart alone we would come down on the bullish side of the fence, favoring the Cup & Handle or the Head-and-Shoulders interpretation, especially as moving averages are in bullish alignment and as we are closing in on the most seasonally bullish month of the year for gold, September. However, there are other important factors that give grounds for caution at this point.
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