The Dominant Intraday Arc Trendlines to Watch This Week in Gold

Intraday Gold prices are forming a classic “Arc Trendline” pattern that should be interesting to follow in the week ahead – depending on whether this structure continues gently or if price breaks firmly through one of the arc trendlines in place.

Let’s take a look at the pattern and note the levels we should be watching:

(click for full-size image via Flickr)

First, let’s take a brief look back at the beginning of May 2011 to see two more little “Arc Trendline” patterns that formed and respectively broke, resulting in an impulse move when price broke free of its arc trendline boundaries.

Arc trendlines are no different than typical trendlines, except that traders aren’t as accustomed to thinking in terms of ‘arc’ trendlines – straight line trendlines grab our eye easier.

Anyway, we had a quick arc trendline that ended May 5th with a breakthrough of the upper arc boundary which resulted in a rally from $1,470 to $1,530 in the context of another arc trendline pattern.

Price broke down sharply under the falling trendline on May 11th, resulting in an “ABC” move from $1,530 to $1,480.

As you’ll see from the chart below, price later broke through the boundaries of a common descending triangle pattern which puts us into the present, wider, arc trendline structure.

The current upper resistance trendline rests where price is now – at the $1,545/$1,550 region; the lower support trendline connects the swing lows and ends presently at $1,525.

These are the intraday/short-term structural levels to watch for any sort of breakthrough which could result in another impulsive breakout move. Otherwise, look for price to play “ping pong” between these boundaries.

If the chart above is too small, let’s step out to the 120 min chart and also draw in a nice triangle pattern:

Now we can see the little descending triangle pattern that formed for most of May that price broke through impulsively near the 20th on the breakthrough above $1,500 (round number).

This breakthrough is a good example of the pattern/concept – it was the trigger that opened the door to play for an upside rally that developed into the present arc trendline formation.

Keep these levels in mind and use these as neat little examples of both the ‘arc trendline’ concept and a triangle breakout play.

Corey Rosenbloom, CMT