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Mario La Marra When Gold traded at a low of $255 per troy ounce in early 2001, who could have imagined that within 5 years it would almost double in value to trade at over $500 per troy ounce?
Looking at the Daily Chart of Gold (GC-SpotV) on Chart 1 below, we can see where the most recent Gold Rush commenced on 16 February 2001 and, with a few minor pullbacks, has kept on a steady march right through to its current price.
A 1 x 1 Gann Angle drawn from the 2001 low is used to measure the strength of the move by identifying a ratio of price to time. Amazingly enough, as this line extends forward in time it connects a few price points as the chart comes to rest on this line, thus finding support. For this reason one could almost mistake this for a trend line.
Chart 1
click chart for more detailChart 2 below takes a closer look at the most recent price action in Gold. We can identify a double bottom created by the two price dips in February and May 2005. Using the ABC Pressure Points tool from the Safety in the Market software we can project a price forecast equal to 200% of the previous A to B range. The strength of this market has seen price action surpass this milestone and carry on through to break the psychological $500 barrier.
Chart 2
click chart for more detailAre we close to seeing a top or is there more steam left in this market?
Whatever direction the market decides to deliver, keeping an intuitive stop movement strategy and sticking to a plan should leave us feeling confident with our trades.
Trade Smart
Mario La Marra
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