The Rand gold price appears to be at, or very close to a major buy point. In a previous article, I highlighted a possible symmetrical triangle, which then, was an indication of much higher prices in the near and more distant future. This pattern is now setting up nicely, and performing all the technical confirmations that are normally associated with this pattern.
If you look on the chart above, you will see that price broke out of the triangle at about R 8500, and has now returned to test that breakout at R 8500. It is quite normal for price to test the breakout level (in this case R8500) or pullback to the apex of the triangle. What does this mean? It means that gold is either at an ideal buy point, or that the buy point is slightly lower (at the apex of the triangle).
For the target price of this pattern, see my previous article called: “South Africa Beware of the Coming Storm” (follow the link above).
Is this analysis consistent with the outlook for the South African rand and the US dollar gold price?
Below, is a 5 year chart of the US dollar/SA rand exchange rate.
(chart generated on fxstreet.com)
I have drawn a support line, and you will notice that price (dollar/gold exchange rate) is currently at support. This could possibly be an indication that price might bounce very soon. I have also indicated three points, marked with an A. These points are similar, from a fractal perspective. The first 2 points were key or pivot points, from where the price bounced materially. If I am correct, and the third point is similar to the first 2 points, then price should bounce from here.
It is important to note that the points are similar, not identical. Therefore, though there may be a bounce coming, it will not necessarily be identical to the previous two bounces.
A bounce in the price (depending on magnitude) might hold bad implications for the general stock market. Are we on the cusp of another round of risk-aversion?
For more on my proprietary fractal analysis, visit: http://hgmandassociates.com/.
I have also done an analysis of the US dollar gold price, which you will find here.
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