May 11, 2010 2 Comments
NB! THIS ARTICLE HAS BEEN UPDATED, SEE http://hubertmoolman.wordpress.com/2010/07/28/gold-update-28-july-2010/
(Originally sent to subscribers on 17 April 2010)
I have decided to put this short document together to illustrate the potential of using fractals to analyse the gold and silver market as regards to where the price is going.
I have included two charts, one for gold and silver, which is really a picture that should say it all as regards to how fractal analysis is applied.
This should give you an opportunity to follow the market over the next couple of months in order to determine whether this kind of analysis is useful.
I encourage you to analyse these charts for yourself, and you are welcome to ask any questions.
Fractals – Mini Introduction
Now, the important thing to know is that on a price chart of say gold, patterns tend to repeat themselves. The reason for this is really how nature, including human nature works.
In nature including the financial markets as things grow, patterns or actions tend to repeat. This concept is called self-similarity and it is the foundation of fractal analysis. These patterns display self-similarity on all scales. However the patterns do not have exactly the same structure but it is still the same type of structure.
So, if one pattern is complete, and one is able to identify a current pattern, that is still in progess, and a match between the two is established, it should be possible to predict how the current pattern will play out.
Below is a 4 year chart of the gold price.
(chart generated on fxstreet.com)
There are basically 2 patterns or fractals on this chart which are potentially matching. I have marked them as 1 to 4. You will see the 1st pattern is smaller than the 2nd. You will also notice that the two patterns are not exactly the same, but there is a similarity.
To identify these patterns one has to use a combination of traditional geometry as well as, more importantly, an “artistic eye”.
WARNING -It is very important to know that one has to be aware of the bigger picture, or longer term chart (fractal analysis) and that this shorter term analysis is consistent with what the longer term analysis is indicating. The longer term analysis is not the subject of this document, however, I am satisfied that it is consistent with this analysis, in order that we can possibly assume the same outcome for these patterns.
So currently we have potentially just hit point 4 at the end of March 2010, and gold should be working its way up to the resistance line, in a relatively accelerating manner.
At this moment, that target could be just over the $ 1300 dollar level, but it should be clearer closer to the time.
Below is a 4 year chart of Silver
(chart generated on fxstreet.com)
The same as for gold, there are basically 2 patterns or fractals on this silver chart which are potentially matching. I have marked them as 1 to 4. You will see the 1st pattern is smaller than the 2nd. You will also notice that the 2 patterns are not exactly the same, but there is a similarity.
Same as for gold, I am satisfied that this analysis is consistent with the long term analysis.
So currently we have potentially just hit point 4 at the end of January 2010, and silver should be working its way up to the resistance line, in a relatively accelerating manner.
At his moment, that target could be just over the $ 21.50 dollar level, but it should be clearer closer to the time.
I hope this is of use as regards the outlook for the gold and silver market as well as applying it in future analysis.
If you are interested in learning more about fractal analysis, stay subscribed and consider buying my Long Term Gold Fractal Analysis Report and Silver Report as well as future reports.
The Long Term Gold Fractal Analysis Report is $50 and you can email me for details.
NB! THIS ARTICLE HAS BEEN UPDATED, SEE http://hgmandassociates.com/2010/07/28/gold-update-28-july-2010/
You can find me here for current gold and silver commentary:
Warm regards and God bless you