The last time I updated our gold charts [see: Update on Gold, Jul 24, 2015] I noted that it looked like a good buying opportunity.

For those who are interested, however, it’s worth noting that GC just tagged that yellow .500 Fib level and the bottom of a fairly well-formed channel at 1072.3 that could mean a significant bounce. The initial target would be the neckline (1140) of the just-completed H&S Pattern (that targets 970.)  If things really got going, 1285 looks mighty interesting.

As luck would have it, that was the bottom.  GC spiked to 1140 within a month, a nifty 6.4% gain. At that point, it had backtested the bearish H&S Pattern that targeted 970.  It could have fallen pretty dramatically at that point.But, it didn’t.  It rose to tag a trend line (dashed, purple line) off the January highs before dropping back below that neckline.  Surely, at that point it would have continued on down to establish new lows.

But…it didn’t.  It made its way back up to tag that very same TL all over again this past Thursday — where it reversed yet again.  After five tags and five reversals, maybe that TL is telling us something.

continued for members…In the big picture, it doesn’t look like much.  It’s pretty much lost in the shuffle in the lower right corner.  And, there’s no point in the past that ties in with it.

The falling blue channel seems to have gained some validity — thanks to the Aug 24 and Sep 24 reversals at its .236 line.  But, we certainly can’t rule out the falling red channel just yet.

In fact, these next few weeks should be very interesting.  With gold acting contrary to stocks during August’s sell-off, the idea of a spike up to the blue midline (the yellow dot at 1285, also the purple .886 and our other target from July) takes on added significance.

In Friday’s post, I shared a downside scenario that fits in very nicely with the idea of a sell-off into late October — about the time the blue midline crosses 1285.  Bottom line, GC has some decisions to make.  Clearly there is a concerted effort not to let it tumble into the abyss.  But, there is also a concerted effort to not let it run away to the upside.

TPTB could punt, and let it bounce around in a triangle formed by the purple TL and, say, 1072 through at least the end of the year — which would be painful for traders, but perhaps what the overleveraged, overhypothecated masters of paper gold really need.  Like most other “markets”, it seems that buying time has become a very popular long-term strategy.

If it does break out, which I believe is likely, the upside targets are the SMA200 and yellow neckline at 1178, the white .786 Fib at 1198, the purple .618 at 1219 (which would make a neat reversal for an IH&S) and, of course, the purple .886 at 1283.  GC has attempted and failed to break above its SMA200 4 times since March 2014.  There’s a very good chance this could be failure number 5.

Downside targets are really focused on the falling red midline where it crosses the green 1.618 at around 1000 — a nice round number.  But, we’ll cross that bridge if/when we get a reversal.

Stay tuned.