Some people call it a flag, others a pennant or a triangle. No matter what it’s called, Gold’s chart displays the technical pattern. To us, it’s a triangle and they tend to appear right before the underlying investment is on the verge of making a sizable move.
As you can see on the chart below, element number 79 has an ascending line connecting recent bottoms and essentially a flat line on top. You might remember the right-angle triangle from everybody’s favorite math class, geometry.
Au’s price is almost wedged at the point and that’s usually when investors decide, up or down. We also see declining volume throughout the creation of the triangle, meaning the number of buyers and sellers dwindled as Gold consolidated. The next move will likely be accompanied by a surge in volume, confirming the breakout or breakdown.
Investors might consider taking some profits if Gold breaks the bottom of the triangle and going long if it pops above the top.
A few way investors can invest in gold might consider:
- SPDR Gold Shares (GLD) – bullish
- Futures – bullish (buy)/ Bearish (sell)
- ProShares UltraShort Gold (GLL) – bearish
Short-term investing is high risk, especially with highly leveraged futures contracts and is only for the most aggressive investors who can afford to lose large chunks of money.