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The Gold Megathrust
Since mid-2010, the gold price consolidates sideways predominately within the boundaries of the blue-green triangle. In January 2012, the resistive blue triangle leg was broken successfully at approx. $1,700 giving the starting signal for the so-called “breakout“ reaching nearly $1,800 a few weeks later. Thereafter, a so-called “classical pullback“ occurred – typically bringing the price to the apex of the triangle, whereafter the final movement of a triangular price formation begins: the so-called “thrust“ – either a strong and longer-termed up- or downward-trend. A few days ago, a correction to the 260-day EMA at $1,620 occurred – as it was breached shortly, it must be taken into (risk-) account that another pullback may occur (currently at $1,623.90). A sell-signal la thrust to the downside is not generated until falling below the price level of the triangle apex at approx. $1,625 and reinforced when breaching the (extension of the) blue triangle leg currently at approx. $1,590. As the price rose above the level of the apex recently, a strong buy-signal la thrust to the upside is active. Principally, the goal of a thrust (to the upside) is to transform the resistive high of the breakout ($1,793) and the triangle ($1,923) into new support – in order for a new and longer-termed upward-trend to begin thereafter.
Thus, we are quite bullish for the gold price at the very moment as – apparently – another thrust to the upside has just started. In comparison with the 5 thrusts during the last 2.5 years (highlighted in light-green), the current thrust is anticipated to be much stronger and enduring much longer, because the triangle is much larger this time.
Another reason why we anticipate that the most recently started upward-trend will be one of the strongest moves in the 11 year history of the bullmarket is that the current triangle has been forming above the “long-term” upward-trend (green channel) – in order to transform it into new support. Technically, it is valued as a very bullish sign if the resistive top of a trend-channel is broken and acting supportive. The current triangle had the task to test and potentially confirm this trend-channel as new support – if successful, a strong and longer-termed upward-trend is typical.
The reason why the gold price prefers to form triangles in the short-, medium- and long-term is that the price fluctuated within the boundaries of a 20 year long (red-green) triangle since the “old alltime-high” ($852 on 21st January 1980) – and that the new (green) upward-trend-channel, which started in 1999-2001, represents the thrust of this triangle