Here is a chart of spot gold prices over the past 6 months. I have added in three “trendlines” to the chart, which was a rough hack job:
For technical analysis fans, here are some questions:
1. Is it a foregone conclusion that gold will continue rising, or at least no lower than $1260, plus a few dollars each day?
2. If so, what is the proper trendline to use?
Technical analysis also suggests that if the trendline “breaks” that you can no longer assume the trendline exists, and that there is some other trend that is occurring. How do you figure this stuff out without using the chart as a retrospective explanation?
The only reason why I look at charts is a measure of sentiment over time, rather than trying to derive future prices from chart movement.