Traders often drive their short to medium term strategies off the outlook (or trend) provided by the longer term chart. Here's a hunch about the gold outlook based on the weekly chart

Gold Outlook - triangle theory

It's very early days but the weekly gold chart looks to me like a triangle is developing

Ultimately, this would be a bearish development. If the triangle theory is right, it looks like a continuation pattern where a drop below the triangle support would be a bearish development, signalling a new leg of the down trend is underway

In the meantime though, this could take quite a while to play out and there are various different forms the triangle could take. Here are some possibilities

Descending Triangle theory

Gold Descending Triangle theory Gold Descending Triangle theory

Symmetrical Triangle theory

Gold symmetrical triangle theory Gold symmetrical triangle theory

Ascending Triangle Theory

Gold Ascending Triangle Theory Gold Ascending Triangle Theory

Potential Trading implications

  • Whatever happens from here, a move below the $1180 low would look like a big picture bearish development
  • If a triangle does continue to develop, traders looking to position in the direction of the longer term trend may get a chance to short sell on another rejection of the resistance. Here they may be looking to get set with an early entry for an eventual downside break out of the triangle
  • The triangle is pretty deep. This might give more aggressive traders the opportunity to buy for a counter trend rally once the triangle support is defined
  • A break above the  $1434 peak would blow the triangle theory and suggest a larger corrective rally is underway