Commentary for September 1, 2009

| September 1, 2009

Today we finally had our first sign of a potential breakout from the pennant formation on the Gold Currency Index daily chart:

That close just above pennant resistance today isn’t decisive, by any means, but it is a start. We’ll need to see follow through during subsequent sessions in order to confirm the breakout. Notice that on the comparable daily chart of gold in US dollar terms price action remains well within the boundaries of the formation:

The GCI has broken out or down ahead of gold many times since we started calculating this index four years ago, and on every such occasion gold has soon followed. Again, this is simply the first step, and we’ll need to watch the price action closely for confirmation over the next several sessions. Stay tuned!

Category: Commentary, Market Update

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