Gold moved up on Tuesday and as we get ready to close the month, price is sitting at the most important price point for the year. The chart below shows the green channel lines that gold has been following ever since the 2008 crash. The lower green channel line has provided every single low and with the exception of the August price explosion, the middle green line (or midway channel line) has provided all the peaks.
A channel is about the least arbitrary technical tool we can look at because the MARKET price structure defines its boundaries. Yes, a human still has to put the lines in, and that is why we don't call it totally unbiased. The channel is nothing more than a standard deviation of price that the market itself forms. It stands to reason then that the greatest place a market can have a price peak is at the channel line. After all, it is the upper standard deviation of price.
Since that is a factor that seems to be working well, one of the things the chart is telling us is that price is actually arriving at one of the two potential high price points for the year. The other of course being the upper green channel line at the 2100-2200 area. So while the trends are all up and the market looks great, it is also at one of the two potential high points for the year. If gold can close above this channel line, the upside and 2000 dollar gold will come into play. The other scenario, is that gold is going to form a major high point next week, and a seasonal correction is going to take place. Which one will it be ?
