Goro is bucking the trend today and is getting ready to breakout of a bullish falling wedge. The neckline held support yesterday which is what we like to see. I would like to see a nice pick up in volume when GORO breaks the top red rail of the bullish falling wedge. These stronger stocks will lead the rest higher when the time is right.

The XAU is showing our uptrend channel is still intact and there is a strong possibility that we are forming a triangle consolidation pattern. We have 3 confirmed reversal points so far in the development of this triangle with the 4th and most important reversal point just about finished. You can see where the top blue rail of the triangle and the bottom black rail of the uptrend rail intersect at 192. I would view this triangle as a halfway pattern to the upside. The blue arrows is how I would measure the price objective. We may have another day or two to complete the red triangle and start the next leg up. Remember consolidation patterns are a fight between the bulls and the bears until one side wins out. The odds favor an upside breakout as the XAU has been in an uptrend since the first of the year. I know it doesn’t seem like it but that’s what has been happening. Two steps forward and one step back.

GPL broke the top rail of it’s downtrend channel earlier this week and is now backtesting the potential breakout. Sir iluvpms ask about a price objective for GPL as he own shares of this stock. There are 2 ways I measure for a price objective. The first way is what I call the breakout to breakout method. To use this method you have to have 2 completed consolidation patterns. First you measure from the breakout of the lower consolidation pattern, in this case, and measure all the way up to the first reversal point in the next consolidation pattern just above, red arrow. You then take that measurement and add it to the breakout of the upper consolidation pattern to get your price objective. The chart of GPL below shows this first method, breakout to breakout, green circles on chart.

You can see this method has a price objective to about 10.92 or so. The other method I use is to measure the impulse leg in the lower consolidation pattern to the first reversal point in the consolidation pattern just above, blue arrows.Take that measurement and add it to the last reversal point in the bull flag to get your price objective at 13.85. By putting both the measuring methods together it gives a zone, brown area at the top of the chart, in which to look for the move to exhaust itself.

By putting these two measuring techniques together we have a price target of 10.92 on the low side and 13.85 on the high side. I hope this answers your question on how high this potential move may carry once the impulse leg gets underway. All the best iluvpms…..Rambus

GORO had another backtest to the top blue rail of the 6 point bullish expanding falling wedge. This is a low risk buy point right in here.