Gold: Ready to Shoot?

Gold and Silver is money, everything else is credit – JP Morgan

Primary Uptrend

This guy is not just flaunting these assets but the primary trend in this chart unearths the truth behind his statement. Really strong trend since our childhood – of course not fully visible due to data limitations. A furious rally started since March 2020 dip and took it to 56191 from 38400 (46%) in just 20 weeks – perhaps the fastest one in absolute terms.

Harsh Reaction

Like any other bull run, this one also faced a harsh reaction from August 2020. Wiped out almost one-fifth of the gains (21% from top) in a 33week time period. Comparing to Mar2020 rally to the top, this reaction was bit slower in terms of time duration. 46% in 20weeks verses 21% in 33weeks.

More than just a Pullback

Gold pulled back near 50000 mark and created a psychological resistance zone . The pullback gained momentum after breaking this zone and retested all time high zone. This spike was more than just a pullback.

The Second Reaction

The second reaction started from March 2022 and ended near the prior psychological level 50000. So, resistance turned into a support. This reaction took 28 weeks but the reaction was just 12% from the March top. Comparing with the Aug2020 reaction, this one lacked momentum on the downside – as reaction was smaller in approximately same time period.

The price-time analysis of both the reactions suggest that this time sellers were not very active and buyers were busy in accumulation at lower levels. Small and time consuming reactions with sharp rallies are good omen for investors.

A Rally in Momentum

The current rally from Sep end 2022 is very swift. The price may face some hurdles near major resistance zone of 56191 to 54789. If the higher low trend persists, there may be further congestion. Theoretically congestions lead to expansions and the bullish nature of the ascending triangle congestion (see chart) signals expansion in the upward direction.

If that happens, an immediate target for the triangle could go around 67000.

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JJ Singh
Full TIme Trader/Investor
Moderator, TradingView

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