Chart of the Day - Tuesday, May 12th, 2020

Today’s Chart of the Day was shared on Twitter by Tarek Saab (@FibLines). It is a daily candlestick chart of Gold futures. Tarek points out that price has coiled into a triangle pattern over the past few weeks. Think of these triangle patterns like the tightening of a spring, where the potential energy builds up as it is tightened. Similarly, as the range tightens and price makes its way towards the apex, the potential for an explosive move builds. Eventually, price will have to resolve higher or lower from this pattern. As Tarek notes, triangles often resolve in the direction of the underlying trend, which in the case of Gold, is higher. Either way, you can anticipate a strong move out of this consolidation in the near-term.