Breakout!

By Peter Degraaf
Jun 20 2008 11:36AM

www.pdegraaf.com

Gold is breaking out on the upside today, after having been contained in a bullish pennant formation for the past 93 days. This 93 day period satisfies the time element, (referring to the average of the late spring – early summer pull-backs in gold), since the current bull market began, in 2001.

Virtually every year we witness a Christmas rally in gold, with the seasonal lows coming in the spring, following a correction towards the 200DMA.

Here are the months during which these seasonal lows have occurred since 2001

* 2001 in April
* 2002 in February
* 2003 in April
* 2004 in May
* 2006 in June
* 2007 in June
* 2008 on May 2nd, with a secondary (higher) low on June 12th
* Every year since 2001, once this seasonal low was in place, the market rose higher during the remainder of the year, culminating in the annual Christmas rally.

An upside breakout, such as the one we are witnessing today (Friday June 20th), will confirm this secondary bottom and will attract a lot of traders who are currently on the sidelines, to commit funds to the gold sector.

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