2014 has been a good year for gold – so far.
The price jumped about $80 an ounce so far in February and about $140 an ounce since the start of the year. Gold bulls are chortling about the long-awaited breakout
Are they finally right?
Short-term, we say yes they are. There are two bullish patterns developing on the gold futures charts that make us think the near-term trend will be up.
The first bullish pattern is a double bottom below $1200 made first in June last year, then touched again last December. Since then the price has marched firmly up, and broken cleanly through the short-term downtrend line. Both are bullish omens.
The second pattern is not nearly so clear. It is a potential cup-and-handle pattern (see chart) that still has not been confirmed. But if it is, it adds to our bullish outlook.
The important resistance is around $1327-$1332, which is the top of the consolidation area formed last week. If that resistance holds for a while, we see a short pullback to the $1305-$1297 area to establish the “handle” of the cup-and-handle pattern, followed by a continuation up, to our short-term target around $1405.
That’s our call for the short term. For the long-term, our perspective is a little different. But we’ll leave that for another day.
Chart: Gold futures, continuous contract, daily bars, to Feb. 21, 2014
= = =
Learn more about Naturus, a subscription service for futures traders here.
