There are two turning points that are about to be in play. The first one is today or tomorrow and it’s based on the apex of the triangle created by the two lines that we discussed in the bullet points. OK, what was the apex technique again? We first described the apex technique on October 17 when we discussed the following HUI Index chart:
Let’s move back to the HUI Index chart once again as it features a new technique that we’ve been validating for the precious metals market and it finally seems that it’s justified to include it in our set of tools. The technique is the triangle apex reversal. The technique is quite straightforward and even though it may appear somewhat random (it mixes both price and time), it works surprisingly well.
Moving to the point, the triangles are usually drawn in order to create support and resistance levels, check whether a breakout or breakdown is more likely and estimate the likely size of the move that follows the breakout or breakdown. However, if you continue to draw the triangle borders until they cross, you will get a quite precise time target. You can see the above in action on the HUI Index chart. The triangle’s apex is a bit below 185, in early September. The former is irrelevant, but the time wasn’t. The HUI Index indeed topped in early September.
We noticed that the more visible the triangle is and the greater number of extremes confirm its existence, the more reliable the prediction for the turning point becomes.
The apex of the triangle in gold is either today or tomorrow. Naturally, the turnaround is not imminent, but the above is enough for one to be on the lookout for bearish confirmations and be prepared to take profits by closing your long position shortly.
The second turning point is based directly on gold’s cyclical nature. It’s on January 8th, so it’s still relatively far, however, at the same time it’s something that we should keep in mind. If gold tops shortly as the first triangle’s apex suggests, then it could start a decline and form a temporary bottom close to January 8th.
Alternatively, we could see another wave up and the final top close to January 8th. Could the counter-trend upswing really last that long?