Gold just made its most bullish move in five years. As you likely know, gold has been in a bear market since 2011. After peaking at $1,899 in 2011, the price of gold has fallen 35%.
As everyone knows, nothing moves in straight lines and gold didn’t go straight down for five years. Instead, it rallied several times on the way down. However, each rally failed to push gold higher than the rally that came before it. You could say each rally failed to achieve a “higher high.”
Higher highs are an important concept to be aware of. If a rally doesn’t make a higher high, it can’t turn a bear market into a bull market. So knowing how to spot a higher high can keep you on the right side of major trends.
For example, gold rallied 15% from June 2013 to August 2013.
Many folks thought this marked the end of the bear market in gold. But if you understood the concept of a higher high, you’d know they were wrong. The rally failed to push above the high that came before it. Gold resumed its bear market, and fell another 26%.
Yesterday, for the first time in five years, gold has made a higher high.
As you can see in the chart, the price of gold surged to $1,248 yesterday. This pushed it past the prior high of $1,185 it hit in October.
Each high has been marked with a reddotted line in the chart. Think of these as stairs. Since 2011, gold has marched down the stairs. Today, for the first time in five years, gold took a step up.
This is a classic bottoming pattern. It’s an extremely important signal that suggests the gold bear market is over. The odds now favour gold going higher.
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