It is our hope that you will understand the scope and place of these articles in your own investment decisions.
There are hundreds of sources that you may choose to turn to each week to read theories… Why gold prices may rise, why stock markets should fall… Why the US dollar may or may not maintain its status as the world’s reserve currency for another year. Isolated fundamental theories are fascinating and make for good story-telling. However, they carry little weight as to what is actually occurring in the market itself.
The market is the sum of millions of unique individuals, each hoping, believing, researching, and ultimately deciding how to act. We may know some fundamentals – but we cannot possibly know what each of the millions of individuals who participate in the market is thinking. And so we cannot possibly have complete fundamental knowledge. Technical analysts recognize their own inability to know all market fundamentals – but seek another way to overcome this inherent limitation.
All individuals, no matter what they believe about a market, must come together in one common place – and that place is the current price of the asset. Whether an individual chooses to buy, sell, or wait on the sidelines, he does so at the current market price. The current price is the single data point that contains the sum of all investors’ knowledge at the present moment. Although we cannot know all fundamentals, we can study trends and trend indicators within that most simple yet powerful data points – price.
Trend analysis gains its merit by Newton’s First Law of Motion: “An object in motion tends to stay in motion unless a net force acts upon it.” The same may be said of markets: “A market in motion tends to stay in motion unless a net force acts upon it.” And so we apply trend or motion analysis to the gold market and look for signs which may indicate that a new force may or may not be starting to act.
Gold Ascending Triangle – Market in Motion
It is important to have a clear visualization of what is happening now in the gold market. For that, we turn to the diagrams below. The integrity of the upward-sloping triangular consolidation is our primary concern. Although the boundaries of the trend do extend until the end-2019, most triangle patterns will resolve strongly between 2/3 to 3/4 of the way through the timeline of the pattern. Now at 31 months into a total of approximately 48 months for the ascending triangle’s boundaries, that puts gold within six months of an expected resolution – which will set the stage for the entire precious metals complex well into the next decade:
Again, the bias of this pattern is still one of an upward resolution. However, in rare instances, positive patterns will abort due to some fundamental shift in the underlying market. A negative resolution might occur. We will only know these fundamentals in hindsight, we will see a shift in the market occur on the charts first.
Focus on Price Trends
These articles are highlight what is actually occurring in the precious metals market each week. The study of the market itself is what we call technical analysis.
This week, for example, the international store of wealth found support in a clear series of rising buyers above $1,238, as can be seen on the charts above. As Newton said, this trend of rising support must be respected unless proven otherwise. We must constantly assess, and then re-assess, where we are from a technical standpoint if we hope to catch trend-changing signals as they arrive.
What you read here is a continuum of the analysis that crosses our minds and desks each week. We review these charts each week because the discipline of doing so ensures that we keep a strong pulse on the markets at set regular intervals. All it takes is one missed signal, one missed decision point, one missed trend-change…and the cost could be significant sums of hard-earned capital.
Bullion Exchanges Market Analyst
Christopher Aaron has been trading in the commodity and financial markets since the early 2000’s. He began his career as an intelligence analyst for the Central Intelligence Agency.
Christopher Aaron specializes in the creation and interpretation of pattern-of-life mapping in Afghanistan and Iraq. His strategy of blending behavioral and technical analysis has helped him and his clients to identify both long-term market cycles and short-term opportunities for profit.
This article is a third-party analysis and does not necessarily match views of Bullion Exchanges. Do not consider Bullion Exchanges as financial advice in any way.
Mon- Friday | 9am – 5pm
30 West 47th Street, Store 1
New York, NY, 10036, USA