The “Power of the Pattern” was reflecting in the 3-pack below that Gold looked to be creating a repeating pattern that was critical to key sectors in the past.
At the same time Gold looked to be creating a repeating pattern, it was hitting a Fibonacci resistance point (61%), where if history was any guide, Gold would pick up downside momentum very quickly. (see post here)
This situation was presenting two opportunities…For those that remained long, harvest/sell. For those looking to score on defense, this was a great time to establish short positions, since Gold could fall apart per this repeating pattern.
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Many blog viewers have been writing in asking where will Gold/Silver could find support. See below for some key multi-year support levels.
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7 days ago the “Power of the Pattern” brought up the idea that Gold could fall as much as $500 per ounce. (See Could Gold lose 500 bucks here) At the time the above 3-pack was created, Gold was trading at $1,740 per ounce. The above 2-pack reflects key multi-year support levels that could come into play.
Bounces have to take place along the way, especially when Gold has declined almost $200/10% in a matter of days!
The gold phenomenon is really interesting, it’s pure market psychology.
I read some “guru” making the point that the fall in price was making gold buying more affordable! But the only “value” of gold was clearly based on an assumption of price appreciation.
This isn’t like watching Intel fall and waiting for it to reach some discount to book value. And the industrial uses have probably fallen because the price rise compelled actual users to conserve and substitute.
Chris – Can the combo be used to identify a major support price for GLD? thanks, cjk
David….great question. 38% is there. My goal was to see if a key Fib level and a support line would come together in the future.
When gold was trading around $1,640, the Power of the Pattern projected that Gold could reach the $1,900 level, due to the combo of a Fib extension level and a resistance line (see Gold projection here)
Gold turned on a dime when it hit this combo! The lower level discussed in this post were attempting to find a similar combo.
Chris
Why leave out the 38% Fibo on gold? thanks