Dollar Story (1): Gold and US Dollar

I agree with Kenny's count for Gold (ETF GLD). Gold breaks up a symmetrical triangle pattern, green [a] [b] [c] [d] [e] in chart.

Based on pattern expert Bulkowski's research: symmetrical triangle is one of the reliable patterns in stock market. The percentage meeting price target for up breakout is 66%.

Now let us calculate the target for this symmetrical triangle up breakout pattern:

Triangle Height = [b] - [a] = 96.97 - 84.92 = 12.05
Breakout price = ~ 94.50

The breakout price is the price when stock breaks up triangle's [b] [d] line, and in GLD case it is also the gap up price, making the breakup more impulsive. Now we can calculate the target price:

Target price = Breakout price + Triangle Height = 94.50 + 12.05 = 106.55

In Bulkowski's website, he also adjusts the target price by multiplying "percentage meeting price target", making the Adjusted Target Price more conservative:

Adjusted Target price
= Breakout price + Triangle Height * percentage meeting price target
= 94.50 + 12.05 * 66% = 102.45

Keep in mind, one share of GLD is 1/10 OZ of gold. So Target price for gold is $1065.50 and conservative target price is $1024.50. If you check gold price, you will find out that gold price reached $1024.20 on last Thursday, September 17, 2009, only $0.30 point shy of my conservative target price. Amazing, ha? Math works fine on stock market as well, right? At least for this case! :)

Will it go up to $1065.50? It may, if dollar has one more down leg, or it may not if dollar's bottom is already in. We will see soon.

I will update a dollar chart later this week. I am pretty sure dollar is at a critical turning point right now. I am not bearish dollar at all, at least at this moment.

Good Luck!!