Clive Maund describes a symmetrical triangle formation in gold and silver.
Symmetrical triangle formations can break either way. However, Clive says other factors normally provide clues as to the probable direction of breakout. Clive says the fact that this triangle formation is above and within a zone of important support strongly suggests that an upside breakout is about to occur.
He says there are several factors pointing to an eventual upside breakout in the gold price and the silver price:
1. General long-term trend, which is definitely up.
2. On a 2 year gold price chart the lower line of the triangle formation, when extended back, is also the long-term uptrend line.
3. The gold price has rallied no less than 5 times from the long term uptrend line.
4. The importance of the gold price uptrend line is reinforced by the proximity of the 200-day moving average, near which we would expect reactions from intermediate overbought levels to terminate.
5. Given the clear validity of this long-term uptrend line, and the continuing upward march of the moving averages there is no reason to suppose that the breakout is going to be anything other than an upside breakout.
Currently, the moving averages are in positive alignment, meaning that a breakout could happen soon.
Clive says "This uptrend channel is very important - gold is an automatic buy whenever the gold price approaches the lower boundary of this channel"