[center][b][size=5]Gold Is In a Classic Cup and Handle Formation targeting 1,450[/size][/b][/center]
A "Cup and Handle" is a bullish continuation pattern in an uptrend.

The 'cup' is best shaped as a "U" and the broader the bottom the better. The 'handle' is a retracement when the right side of the 'cup' reaches its prior highs. The handle often resembles a bullish pennant.

The retracement usually does not exceed 1/3 of the advance of the cup to its second high, although it can go as deep as 1/2 in a volatile market.

Here is a textbook picture of a 'cup and handle formation' from Investopedia.

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Here is the daily chart of Gold. It is in a classic cup and handle formation, with the handle having dropped down today near the 1/3 retracement target of 1183. A number of technicians have been watching it form. The advance to a new high, and the subsequent pullback, have made it now worth noting.

[color=Blue]The handle has been shaping for four days from the peak at 1249.30. The handle generally takes from four days to two weeks to form before price advances again with fresh buying to retest the resistance around the prior high.[/color]

One might watch for the current Comex option expiration to pass next Tuesday, given the large concentration of calls around the 1200 level before gold can make its move higher. There is always the possibility of a counter squeeze, but it is difficult to fight paper with paper given the wide availablility of derivatives, and the laxness of regulation by the CFTC despite recent noises made about reform. Nothing has changed yet.

There is a possibility of a triple top, although this is why it is important that the cup have a broadly tested bottom.

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[color=Blue]The target for a breakout in this cup and handle formation above would be a minimum of 1450. The breakout should be accompanied by increasing volume. The more volume the more bullish the post breakout run will be.[/color]

This is consistent with the weekly chart which we posted a few days ago that shows an inverse H&S continuation pattern targeting 1350 as a minimum objective. In fact, one could draw the cup more conservatively, ignoring the intra-day spikes, and strike a target much closer to 1350.

And what makes this gold manipulation such a perfect con is that they are bullying the public using money taken from the Federal Reserve and the Congress, the public's own money.

What levels might be expected after the intermediate targets are reached?

My friend Brian at the Contrary Investor has produced a series of targets based on the prior high deflated by a number of measures. Here is one that I thought had a certain 'ring' to it. Keep in mind that M2 is a moving target, and moving lower for now. If it turns around and begins to expand again, the price could be much higher. But for now it is in a firm downtrend. So it conceivably could be lower.

Gold Deflated By M2 Projects to $3,912 to Match Its Prior High

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Here are targets for gold and silver based on their prior highs but adjusted for inflation using the Bureau of Labor Statistics CPI, and John Williams' (SGS) unadjusted CPI estimates.

If Silver were to reach $450 per ounce, and gold to $7,500, the junior miners might provide a quite impressive performance. lol.

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[url] http://jessescrossroadscafe.blogspot.com/2010/05/gold-is-in-classic-cup-and-handle.html [/url]

[url] http://www.incrediblecharts.com/technical/cup_and_handle.php [/url]
[url] http://www.trade10.com/Cuphandle.html [/url]

[center][b][size=5]What Does Cup and Handle Mean?[/size][/b][/center]
A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern has low trading volume. It can be as short as seven weeks and as long as 65 weeks.

As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. Below is an example of a cup and handle chart pattern:

Investopedia explains Cup and Handle

A couple points on trying to detect cup and handles:

[color=Blue]Length - Generally, cups with longer and more "U" shaped bottoms, the stronger the signal. Avoid cups with a sharp "V" bottoms.

Depth - Ideally, the cup should not be too deep. Also, avoid handles which are too deep since the handles should form in the top half of the cup pattern.

Volume - Volume should dry up on the decline and remain lower than average in the base of the bowl. It should then increase when the stock finally starts to make its move back up to test the old high. Retest (of old high) - doesn't have touch or come within a few ticks of old high. However, the further the top of the handle is away from the highs, the more significant the breakout needs to be.[/color]

[url] http://www.investopedia.com/terms/c/cupandhandle.asp [/url]

[center][b][size=5]Cup with Handle (Continuation)[/size][/b][/center]
The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks.

As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.

1. Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.

2. Cup: The cup should be "U" shaped and resemble a bowl or rounding bottom. A "V" shaped bottom would be considered too sharp of a reversal to qualify. The softer "U" shape ensures that the cup is a consolidation pattern with valid support at the bottom of the "U". [color=Blue]The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.[/color]

3. Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which is conforms with Dow Theory.

4. Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. [color=Blue]Sometimes this handle resembles a flag or pennant that slopes downward, other times just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement is, the more bullish the formation and significant the breakout.[/color] Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.

[color=Blue]5. Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.[/color]

6. Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.

7. Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.

As with most chart patterns, it is more important to capture the essence of the pattern than the particulars. The cup is a bowl-shaped consolidation and the handle is a short pullback followed by a breakout with expanding volume. A cup retracement of 62% may not fit the pattern requirements, but a particular stock's pattern may still capture the essence of the Cup with Handle.

[url] http://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:chart_patterns:cup_with_handle_cont [/url]