About a month ago, I mentioned the potential for the triangle breakout formation on silver and gold. The rally was explosive and went way beyond its formation target. The market viewed further QE, supported by strong Chinese demand as the catalyst. The past two weeks has seen momentum dry up as gold has stalled ahead of the previous two top formations made in November 2011 and February 2012. Two weekly Doji patterns have formed, which confirms the topping pattern. It will take a weekly close above 1801 to negate the bearish outlook.
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Shaun Downey is a technical analyst and author of the book Trading Time. He can be reached at shaun.downey@btopenworld.com.
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