I’m Back And I’m Here To Stay – The World Is In Turmoil – Gold Is Showing Extremely Bullish Technicals

It’s early in the morning on the 31st of May. My city is burning in the aftermath of protests and civil unrest. Businesses and emergency vehicles are being looted and set to fire. People have become increasingly violent and with each minute that goes by the police scanner references to yet another shooting, stabbing, burglary, or act of aggression even as we had only just yesterday begun phase 2 of reopening here in Rochester NY. This civil unrest is of course spread throughout just about every major city in the Nation and it comes on the tail of coronavirus frenzy that has swept the world over the last 4 months.

In other news – this here will officially be my first blog post in nearly 9 years and it unironically comes on the eve of the birthday of none other than yours truly. What a day.

Oh, and there’s that thing where SpaceX made history with the first privately run manned shuttle into orbit. Kind of cool right?

Anyway, I don’t want to get into political discussions right now. If anyone wants to engage, I’d be fine taking it to Twitter or FB. Right now, this post is about the charts and about trading – which is what the goal of this blog has primarily been, and will continue to be about. In regards to my long hiatus – that too will be another discussion that I may or may not get too in the near future. The important thing is that I am here, and I’m here to stay.

So without further ado, I want to talk about the long term chart on gold.

This is the 30 yr weekly spot price for gold. It is also one of the biggest cup and handle patterns maybe ever. If you aren’t familiar with the pattern, a cup and handle is a bullish setup pattern that typically precedes a powerful breakout. -> /https://www.investopedia.com/terms/c/cupandhandle.asp

In some cases a breakout would be considered after confirmation above the initial peak (which in this case was over $1900) but in this case I see the breakout as confirmation above the 2012 high of $1800. The reason for this is because in 2011 the volatility and crowded nature of the trade caused the metal to briefly peak at over $1900 yet after the initial blowoff, $1800 was the level that was retested not once, not twice, but three times in the coming year afterward. It is my estimation the $1900 will be a mere psychological level and that $1800 will be where the real test lies at.

Pictured above is a chart of silver that I posted on this very blog to call the breakout back in Fed 2011. Same pattern, and not unironically, same asset class and same fundamental reason for the breakout -inflation, uncertainty etc. This is how the next 3 months went for Silver —

Roughly 60% gain from the breakout of $31 which I had called in February.

Of course, Silver went through a bear market shortly thereafter, one that I had warned about right before the peak of the hype.

In any case, I like Gold here as a long term play throughout the next 1-3 years. Based on this pattern my price target for the precious metal during that time is $2650 with an eclipse of $2700 as a brief peak during the bull run.

As far as an entry point is concerned, I did correctly call a buy on the bottom trendline of GLD last Wednesday though unfortunately I did not have long term capital to commit and thus I settled for a solid swing trade. This coiling pattern is extremely bullish and it looks like it wants to go higher sooner rather than later. If you are holding and have been looking to add to a long term position, now looks like the best time though I do not know if we will even get another pullback next week to do so. In any case, as long as that bottom trendline stays intact, GLD is still in bullish consolidation and is looking to spring higher.

If you like my analysis, or want to comment, positive or negative you can do so here or follow me on Twitter where I post my thoughts on trades more frequently throughout the day.

In any case, it’s good to be back.

About Aaron Basile
Day Trading and Swing Trading Ideas, Certified Personal Trainer, Power Bodybuilding, Avid Sports Fan (NBA, NFL)

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