Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Gold Consolidation Formation nears Completion

|Includes: GDX, SPDR Gold Trust ETF (GLD), SGOL

Gold closed moderately lower today, continuing a test of congestion resistance at the $1,750 level near the middle of the symmetrical triangle formation that has been developing since early July. A symmetrical triangle is a technical pattern that indicates indecision and a close well outside of this formation will signal the direction of the next meaningful move with a high degree of statistical confidence. The triangle has narrowed to a relatively small range from $1,675 to $1,765 and it is likely that a breakout or breakdown will occur sometime during the next two weeks. Technical indicators are effectively neutral overall on the daily chart, suggesting that direction is in question.

The Gold Currency Index (NYSE:GCI) has been forming a similar consolidation pattern during the last several months, although its technical indicators are slightly bullish overall, tentatively favoring a breakout from the symmetrical triangle.

With respect to cycle analysis, the intermediate-term cycle from September is at an important inflection point, so the forthcoming move out of the symmetrical triangle will have a meaningful impact on the intermediate-term outlook.

We are on the verge of a short-term technical signal that will materially affect the direction of the cyclical bull market from 2008, so it will be important to monitor the gold market closely during the next few weeks. We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers.

Subscribe to our RSS feed to receive our free daily market update.