Update: Gold’s Expanding Arc In Daily Chart

I wanted to update you on the continuing arc in gold from the prior post “Two Views of the Angles of Ascent in Gold” which was showing a steeply rising parabolic formation.

Here is the current “pure price arc” in gold’s daily chart:

From the last update, gold has bounced strongly off the arc updated from prior post.  Its angle of ascent is still climbing higher, which can be measured by drawing trendlines under each new swing low and noting the angle that each trendline - connecting two swing lows - creates.

See the prior “Angle of Ascent” update contained the recent rising angle measures for these trendlines.

In general, commodities can have a higher tendency to form these ‘parabolic moves’ than stocks because parabolic moves in commodities are generally driven by scarcity or fear (think of the 2008 run-up in crude oil - and the “end of oil” thesis that circulated) , while parabolic moves in stocks are generally driven by greed (”I have to buy now at any price!”).

Still, the analysis, and expected benefit from watching this trendline comes from two factors:

1.  Watch for price to bounce/rally off tests of the lower ascending arc, as occurred recently

2.  Watch for a breakdown of price through the arc to hint that a deeper than normal retracement might be ahead

Ascending or parabolic moves cannot continue forever, and - to an extent - the larger the rise… the harder the fall.

Keep this on your trading and analysis radar!

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