We’ve been observing some pretty tough market conditions for the last two months, the gold spot market being one of the worst. I’m sure you’ve flicked past the gold chart recently and thought to yourself “I am not touching that one”. If you have tried to trade gold, you would have no doubt been left in a state of super frustration as price fiercely churns and consolidates.
The situation is this; Gold is hovering above a major weekly support level, with no pressure behind it to either break up or down. As a result price has churned, consolidating and tightened up in a mean looking price squeeze pattern. This pattern has been building on the daily chart for the last two months. The general rule of thumb with consolidation is; “the longer the consolidation, the more potent the breakout”.
When the market decides which way it wants to go, we can anticipate a very strong breakout. At this stage it’s impossible to tell what direction the market will break out in. As gold continues to grind sideways, price gets jammed tighter and tighter into the wedge. It’s like waiting for a rumbling volcano to finally erupt. What are your thoughts, what direction do you think gold will breakout out into?
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