Right Hand Shoulder Forming in the Gold Chart

I don't myself trade on the basis of technical chart analysis. I sometimes time my purchases based on charts, but mostly I buy when I have money to spare, and I sell when I need money. However, I do enjoy the exercise of making predictions, not to show off to others, but to see whether I'm able to predict the future with some accuracy.

It's satisfying to see a prediction pan out roughly according to my calculations. But it's also important to note the predictions that don't. Being able to second-guess the future is a skill worth developing. We should not fool ourselves into thinking we're able to do this flawlessly. Rather, we should remain humble and always ready to learn from experience.

My prediction back in early May was for gold to reach $1925 before meeting resistance, and it now looks like I completely nailed that one. It's therefore time for me to expand on this prediction which foresaw a another leg up after the formation of a handle, or right hand shoulder, depending on which way we choose to read the gold chart.

A solid handle retraces half the distance to the bottom of the formation. With the bottom in our case at about $1690 and the recent top at about $1910, we should see a retracement to about $1800, which is only marginally lower than where we are currently trading.

There's strong resistance in the $1758 to $1798 range where we traded before breaking above $1800. This resistance is now support, preventing the gold price from going much lower. It's an excellent entry point, and if I had any money to spare, I would buy. The next move is likely to be back up to about $1910 where there will be renewed resistance. However, this will break. Our target for the end of the year, or early next year is still about $2100, with a $3000 target by the end of next year.

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