Gold Could Go Down to $1,600/ozt. – Even Lower – in this Correction! Here’s Why
By: Nu Yu, Ph.D. with Lorimer Wilson
Gold is in the bump phase of a seven-year Bump-and-Run Reversal Top pattern which typically occurs when excessive speculation drives prices up steeply, and is now at a critical juncture which could change the long-term trend of gold. Silver is already in the run phase which does not bode well for its future price. Let me explain.
According to Thomas Bulkowski, the Bump-and-Run Reversal Top pattern consists of three main phases:
A lead-in phase in which a lead-in trend line connecting the lows has a slope angle of about 30 degrees. Prices move in an orderly manner and the range of price oscillation defines the lead-in height between the lead-in trend line and the warning line which is parallel to the lead-in trend line.
A bump phase where, after prices cross above the warning line, excessive speculation kicks in and the bump phase starts with fast rising prices following a sharp trend line slope with 45 degrees or more until prices reach a bump height with at least twice the lead-in height. Once the second parallel line gets crossed over, it serves as a sell line.
A run phase in which prices break support from the lead-in trend line in a downhill run.
A Look at the Future for Gold
The seven year weekly chart below for gold offers a cautious early view regarding the long term trend of gold and is an updated version of a previous article entitled How Low Will Gold Go in This Correction? Gold has been in the bump phase of the Bump-and-Run Reversal Top pattern since late 2009 after almost three years in the lead-in phase.
As can be seen in the chart below the major decline over the past few days has dragged the price of gold sharply below the sell line which suggests the formation of a long-term Bump-and-Run Reversal Top for gold.
If prices keep staying in the territory under the sell line, gold could get into a bear market going forward into 2012 with downside price targets as follows:
$1,600 for support from the trend line of last three years.
$1,400 for support from the warning line.
$1,000 for support from the lead-in trend line.
Full article here
Gold is in the bump phase of a seven-year Bump-and-Run Reversal Top pattern which typically occurs when excessive speculation drives prices up steeply, and is now at a critical juncture which could change the long-term trend of gold. Silver is already in the run phase which does not bode well for its future price. Let me explain.
According to Thomas Bulkowski, the Bump-and-Run Reversal Top pattern consists of three main phases:
A lead-in phase in which a lead-in trend line connecting the lows has a slope angle of about 30 degrees. Prices move in an orderly manner and the range of price oscillation defines the lead-in height between the lead-in trend line and the warning line which is parallel to the lead-in trend line.
A bump phase where, after prices cross above the warning line, excessive speculation kicks in and the bump phase starts with fast rising prices following a sharp trend line slope with 45 degrees or more until prices reach a bump height with at least twice the lead-in height. Once the second parallel line gets crossed over, it serves as a sell line.
A run phase in which prices break support from the lead-in trend line in a downhill run.
A Look at the Future for Gold
The seven year weekly chart below for gold offers a cautious early view regarding the long term trend of gold and is an updated version of a previous article entitled How Low Will Gold Go in This Correction? Gold has been in the bump phase of the Bump-and-Run Reversal Top pattern since late 2009 after almost three years in the lead-in phase.
As can be seen in the chart below the major decline over the past few days has dragged the price of gold sharply below the sell line which suggests the formation of a long-term Bump-and-Run Reversal Top for gold.
If prices keep staying in the territory under the sell line, gold could get into a bear market going forward into 2012 with downside price targets as follows:
$1,600 for support from the trend line of last three years.
$1,400 for support from the warning line.
$1,000 for support from the lead-in trend line.
Full article here
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