The “Power of the Pattern” suggested in the chart below that an Eiffel tower pattern in Gold could be taking place on 8/23. The chart below was created “the morning that Gold hit its high so far this year.” (see post here)
The concern of this pattern? When you see the left side of the tower, you often experience the right side of the tower!
CLICK ON CHART TO ENLARGE
Below is an update of two key Eiffel Tower patterns in the past (Nasdaq 100 & DJ Home Construction) and how they looked in the early stages of the right side of the tower.
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NDX and Housing index peaked, fell hard and then rallied, hitting their 61% retracement level. Once they hit this level they headed down very hard and fast. No way Gold would follow this exact same path would it??? Gold since the 8/23 peak, fell and the rallied back to its 61% retracement level and of late has turned soft again.
Did I mention bubble? Nope! Did I mention Mania? Nope! Does this pattern seem hard to believe? For many I suspect so! Many didn’t buy that Gold could be hitting a high on 8/23, so why buy the pattern now???
Patterns repeat more often than many realize….Realize that is all that I am showing in the above example.
Did it seem hard to believe that the Swiss Franc on 9/1 was calling for a large decline in Gold? I bet it did, yet the Francs 100% batting average on this subject remains in-tact! (see post here)
If you are long Gold, a key support line not far below current prices NEEDS to hold!!!
For sure chart would look different if done in log scale.
See Gold log scale at this link, calling for a peak at $1,900 before it took place.
Chris, I am curious if you would draw similar conclusions using a logarithmic scale?
The advance in your chart through 2007 took the price form $600 to around $1,000. In percentage terms that seems greater than the “Eiffel Tower” steep ascent that went from approximately $1,500 to $1,900.
The 2007 move was followed by a significant price drop (and the late 2009 and late 2010 updrafts were followed by consolidation). The potential drop off the Eiffel Tower that your chart forecasts, seems to imply a much greater drop even though the rise was less in percentage terms than 2007.
Is this due to the rate of the ascent? i.e. the upmove this year was much faster than the 2007 climb? Is it possible that using a log scale would remove the Eiffel Tower?
To Greg, thanks I am familiar with Zerohedge and many fundamental sites. My questions for Chris are purely based on the chart.
Great work Chris. Thanks for sharing it
This is a technical analysis and risk mgmt site. No trading is from a macro or gold bug view.
Zerohedge is a good site for that type of trading and views.
Both are valuable to me but you must know their tools and agenda when following another persons advice.
nice work once again
Thanks for responding.
Larry….Appreciate your viewership and your comment.
When gold was at $1,600, were long and our target was $1,900 due to a Fibonacci extension level based upon the highs back in the early 1980’s. See Fib $1,900 target well before it happened.
The Day of the peak was the first time I shared anything like the Eiffel tower for Gold, ever.
Chris…Thanks for your update. Sold GLD based upon your earlier comments (with much trepidation). Now waiting for an entry – patiently
Thanks as always
I suspect that you could have drawn the same pattern in early 2008, late 2009 and late 2010.
I am new to your site. Did you call those tops? And did you get back in for the significant gains after?
I understand the macro issues and I won’t spend one second on saying your are wrong or they should be overlooked. The Power of the Pattern pegged the August high to the day the Eiffel pattern was posted. Only time will tell where gold goes.
As I shared on the blog, I didn’t say it was a bubble for Gold or a mania or what is happening is due to any macro issue. This chart is soley based upon a pattern taking place. We’ve made a killing this year (well above triple digits) both ways on Silver and not once did it have anything to do any macro issues…Just boring ole patterns.
I don’t care much about being right, just want to help people enlarge their portfolios regardless of market direction.
You have been on top of many issues and I suspect you are again! Thanks for the great comment,
Kevin…I will for sure be looking to be a buyer on support with stops. A guy has to buy support with protection!
Too early Chris. Dont do this. A lot of countries have a lot of debt that they cannot possibly pay back. They will try their best to kick the can down the road. Lets get the DOW:Gold ratio below 2 then we can talk about top in gold. Correction? Sure. Top? No way!
Step away from the investment crowd and ask regular people how much gold they have compared to all their assets. We need mom and pop to buy at the top and then pull the rug from under them.
Thanks for Sharing Chris! Much below 1700 I may be bailing on some long-term holdings, despite macro-view as well.
Hey Chris, you know that pattern is a perfect trace of the Statue of Liberty, with the flame in her right hand! Just sayin’
A strong dollar will undermine gold in the short run. BUT nasdaq went from 700-4700, home construction from 110-1100, and gold from 600-1900. which one of those is not like the other?
I hold 1/3 of total amount of PM’s I want now and won’t sell. Ready and waiting in cash to pick up the other 2/3rds…I hope you are correct and really see the trendline just under $1700…if that breaks, the selloff should mean global liquidation of overleverage in everything and global margin call? Dollars will be very short and gold / silver could be on a half off sale?
Chris…you think it needs a tune up or spare parts itself?
Ed… Channel support comes into play around $1,600. A break of that line big line at $1,200.
Taken a peek at AZO – could this be an eiffel tower in the making? Has it seen it’s peek? Sure don’t like the volume numbers on this one since hitting 343. Thoughts?
Chris, you mention a support level near current Gold price, where is that support?
I’ve learned the hard way not to ignore these charts bec they are counter to my macro view. Hedges are on the way.
Thanks for the awesome chart. Where does long term support come into play. I’ve tried to figure that out but was wondering if you had any comments on that?