Micromanaging the Price of Gold

Gary Tanashian submits:

From last weekend’s NFTRH41:

Anecdotally, I see a gold sector that has quieted down considerably. That is good. Things now seem to be in the realm of chartists micromanaging the decline, looking for trend lines and projecting downside targets, support, etc. With each passing week, we hear less and less about the vaunted Inverted Head & Shoulders pattern that was imagined in gold in response to immense inflationary policy by our friends in government. These are all bullish proceedings, but you must have patience and keep in mind that, as galling as it will feel to inflation believers, there is downside potential prior to the real bullish price objectives, the next of which is 1300.

I spoke too soon. The pattern is gaining some attention this week. But this time, the attention includes some of the negating kind, for the reasons I illustrated two months ago; drum roll please… no prior downtrend. This from an NFTRH subscriber:

Hi Gary: For the longest time, you were the only person that I saw who was claiming that gold’s weekly intermediate term chart was NOT an inverse H & S. And believe me, I read tons of articles with corresponding TA calling the pattern an inverse H & S, and this has been going on for months. I never saw anyone else who was thinking along your lines in that regard until now. Don’t know if you saw it but Merv Burak, a certified market technician (CMT) wrote an article yesterday and the particular points he made were as follows:

‘As for the intermediate term pattern, the left and right shoulders can be seen on the right side of the chart with the reverse head in the middle. Unfortunately, I DO NOT subscribe to these being reverse head and shoulder patterns. They are more legitimately potential double top patterns which I had talked about previously.

Head and shoulder patterns are trend reversal patterns and therefore for a reverse head and shoulder to be present (suggesting an upside break) you would have had to have had a bear market move leading into the pattern. For a normal head and shoulder the lead in trend would have been a bull market trend. In neither of these cases do we have a bear market leading into the formation of the pattern and therefore we DO NOT have a reverse head and shoulder pattern.’

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