As we came into 2017, I was looking for the metals market to bottom and begin a strong rally for 2017 which would take us back to the highs of 2016 and beyond. Thus far, the market has bottomed, but we have only been consolidating for most of the year.
For most people, this consolidation phase has been quite frustrating. So much so that many have actually been losing interest in this complex. But, there is still a certain amount of ‘hope’ evident in the market, especially as gold marginally broke out over its April high. Clearly, it was not a sustained break out, and it has left gold in a precarious short-term position.
I have warned many of those who read my analysis that trend line analysis in this complex most often will have you turning towards a certain ‘sentiment’ right before the market reverses strongly. This past week, many got bullishly excited with gold’s ‘break out’ of a trend line, only to turn down almost immediately. And, to be honest, this has happened at just about each and every metals turn we have seen over the last several years. Remember the failed heads and shoulders break down at the end of 2016? I even warned you in advance back in September and October that the heads and shoulders would set up and then fake everyone out on the supposed ‘break down’ of the neckline, only to get most of the market bearish right as the turn was about to occur to the upside.
Each trend line break, whether it be to the upside or downside, has only served to whipsaw those that make the use of trendlines their primary analysis. And, I have repeatedly warned how using trend lines as a primary means of analysis is the most crude form of technical analysis within which one can engage. Moreover, in the metals complex, it is almost a certainty that you will be whipsawed following trend lines, as we have seen time and again for the last several years. But, I digress.
This post was published at GoldSeek on 14 June 2017.