Technicals II

By Howard S. Katz, Goldseek

This continues the review of technical analysis which I began in my April 20, 2009 article. At that time, we reviewed the saucer bottom and the resistance level represented by a former high. We also discussed Thomas Aquinas’ theory of the fair price and how the vast majority of the people make the mistake of believing this. This makes it possible for us to know how they will behave and to take their money. Believers in Adam Smith win, and believers in Thomas Aquinas lose.

First, let us examine another technical pattern, the symmetrical triangle.  There is a symmetrical triangle which formed in gold back in 2006-07.  This pattern explains the nice run-up of Sept. ’07 to March ’08 and is still influencing the gold market to this day.

A symmetrical triangle is a chart pattern in which successive swings moderate producing lower highs and higher lows.  In the example above, point 1 is 5-12-06; point 2 is 10-6-06; point 3 (the lower high) is 4-27-07; and point 4 (the higher low) is 8-17-07.  Before you can be sure you have a symmetrical triangle, you must be able to count points 1,2,3 and 4 as above, alternative highs and lows.  No fair getting two highs in a row and then two lows in a row.

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