More than two weeks ago, we described the very specific and very important pattern in the gold market, one of short- and medium-term importance. We wrote that the triangle apex pattern based on the intraday highs pointed to a major reversal in the first half of March. The first half of March ends this week, so the key question is if the pattern was invalidated or are we about to see a major reversal in the price of gold.

In our view, the latter outcome is highly likely as it is confirmed also by other – independent – analogies. Let’s start with going back to the chart that we presented on February 26th (chart courtesy of StockCharts).

In the past two weeks gold didn’t soar – conversely, it was trading sideways and its currently lower than it was when we wrote the above. So, one might be wondering if the implications of the triangle’s apex are actually bullish since the move in the last two weeks was down. They are not because this gold forecast technique is based on medium-term lines, so we should also take medium-term rallies and declines into account while determining the implications of the turnaround.

The preceding medium-term move was up – gold moved higher in late December 2017 and for most of January 2018, topping a bit above $1,360. The back-and-forth movement since that time is rather a lengthy medium-term topping formation than a combination of price moves that should be analyzed independently – at least from the medium-term point of view.

Of course, if gold breaks above the $1,360 with a vengeance and confirms a big breakout above it, then the current back-and-forth trading will turn out to be a consolidation within a rally – but that’s not what seems likely at all. After all, gold wasn’t able to break above its 2017 and 2016 highs even though the USD Index declined a few index points below the analogous extremes.

The medium-term nature of the pattern has an additional important consequence. It is that we shouldn’t put too much weight on its precision in terms of days. A good rule of thumb is to zoom in or out on a given chart until the pattern that you want to analyze is clearly visible and then check – without zooming in – if the price is just a bit away from what it should be doing based on the pattern, or not. In the case of our triangle apex reversal, the moment of reversal is “more or less here”, so if we see a reversal this week, it will be definitely in tune with the pattern – it will not invalidate it.