Cup and Handle Formation in the Gold Chart

As a long term investor, I limit myself to trades that last years, or even decades. I'm therefore more interested in long term charts than short term ones, and I don't trade on technical signals. At best, I use such signals to time entry and exit at the limits of a mega trend. However, it's nevertheless encouraging to see patterns develop, especially when they confirm my thesis.

At present, there's a cup and handle formation developing in the daily gold chart as well as one in the monthly chart. The pattern in the daily chart has developed since late November. It has a bit of a V shape, which makes it less convincing than a smooth U shape, but is so far holding up, with the handle on track to complete within a week from now. If it completes, the price of gold will be 2160 dollars for an ounce within a few months from now, in which case we'll see a confirmation of the enormous cup and handle formation in the monthly chart as well.

The monthly chart exhibits a deep U shaped cup dating back to late 2011, with a relatively shallow handle dating back to August 2020. Confirmation of this pattern kicks in at a point somewhere between 2075 and 2100, with a price target at about 3000 dollars.

It remains to be seen whether any of this will play out over the coming weeks and months, but it's certainly encouraging to see the pattern develop. With strong fundamentals supporting the gold price at present levels, there's even more reasons to be hopeful. Gold may well see a whopping 50% rise in its dollar price this year, going from less than 2000 at present to about 3000 before it takes another pause in its upward journey.

Rococo Cup with handle

By Vincennes Porcelain (France, circa 1739–1756), Francois Binet (France, active 1750-1775, born 1731) - Image: http://collections.lacma.org/sites/default/files/remote_images/piction/ma-31852871-O3.jpg Gallery: http://collections.lacma.org/node/229367 archive copy, Public Domain, Link