Major Breakout In Gold Stocks About To Occur

Palisade Research June 28, 2017
Category: Research

Investors looking to position themselves in the initial stages of major price fluctuations and increases in volatility use breakout trading.

A breakout occurs when the price of a share finally breaks through a technical support or resistance level. Once the breakout occurs, volatility increases and the share price will continue its breakout movement.

In technical trading, the most explosive movements are succeeded by channel breakouts and price pattern breakouts. During this period, volatility contracts, before expanding.

Looking at the HUI, we are without a doubt seeing the formation of a triangle price pattern, a pattern that depicts a price range getting narrower because of higher bottoms and lower tops:

Active traders will see this as bullish if they believe the breakout will occur on the resistance, or bearish if it breaks through the support.

The HUI’s volatility has contracted significantly, another indicator that a breakout is just around the corner:

With trading becoming more range bound, and volatility almost at a historical low, this is the calm before the storm.

Which way are you stacking your chips?

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