Gold on the Verge of "Waterfall Event"

The major trend on the weekly chart has been broken, as shown by the weekly graph below.

Since September the market has traced out a massive descending triangle. These are very reliable patterns. A decisive close below $1500 would complete this pattern and establish a target of $1241.

Explosions often need a blasting cap to set off the main charge. Markets can behave like this sometimes. Small, seemingly insignificant patterns, can set off a enormous blast. The daily chart displays a small pennant formation. This small pattern could become the blasting cap. A close below $1530 could spark the blasting cap.

One caveat — the small pennant would become a symmetrical triangle bottom if Gold can close above $1585. This would indicate that the lower boundary of the descending triangle will hold for now.

*Post courtesy of Peter Brandt at Factor Research.