Having look at the broad picture of gold's multi-year uptrend line, it is timely to focus on the negative side of its price action, i.e the downtrend line since 2011's peak. The conclusion is that "price action since July 2012 is a mere side-way rectangle consolidation"...with a vital assumption that gold's major bull trend since 2000 remains intact.
- The two horizontal price lines clearly denote that prices have been moving within the two powerful resistance & support level, i.e. 1,800 & 1,550 level.
- The downtrend line from the peak of 1,900 could have been a major reversal in gold's uptrend but this direction is tempered by the reversal in prices from last August. Therefore, the rectangle consolidation pattern is reinforced at this point.
- Taking cue from September 2012's minor downtrend line, it looks like we have a mini "bullish falling wedge" in the making.
- In conclusion, we may see prices chop around for a while but a side-way rectangle consolidation since 2012 is not bearish in itself provided gold price does not break further below 1,550. Again, bear in mind the absolute support at 1,500 as the ultimate cushion of this bull!
"In a pure technical sense, rectangle is typically a consolidation formation rather than a reversal..."