-- Posted Monday, 12 June 2006 | Digg This Article

Kristen Lush – www.TheGoldSector.com

One of the first things traders learn about the financial markets is that history has a way of repeating itself. And from that one piece of information most technical oriented traders focus on price patterns which repeat time and time again. Below are a few charts of gold that show a parabolic spike price pattern which has occurred twice in the last 10 months and could very much happen again soon.

What is a parabolic spike?

A parabolic spike is a rapid increase is price which is not sustainable. Thus a sharp sell off usually occurs after the rising price ends.

The Parabolic Spike

You will notice that there are two parabolic spikes in this 10 month chart. But what else is similar?

The Consolidation

Before the parabolic spike, gold made a 3 wave consolidation patter twice. What else is similar?

The Gold Rush

This phase is either the final step in this three step pattern or the first step depending on how you look at it.

Putting it together

Final Note:

The recent parabolic correction has provided us with a great short trade from the $682 level and prices are still sliding lower. A close above our trend line will be our exit signal. But until then, we are taking full advantage of this Parabolic Pull Back.

The nicest feature I find when trading gold and gold funds is that we have a very accurate leading indicator. The HUI, this one tool makes trading gold very accurate as it under and out performs gold generally before a pending reversal some times up to 7 days in advance providing more than enough time to tighten trend lines and stops.

Kristen Lush – www.TheGoldSector.com

-- Posted Monday, 12 June 2006 | Digg This Article

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