The rise in gold was dominated by a long-term uptrend. The long-term uptrend line A starts in July 2005, and uses the lows during June 2007 as the second point for the position of the trend line. This long-term trend was broken in October 2008, and many people believed this was a signal for a new long term downtrend. They were wrong — support and resistance defines the character of this market.

The most important trend breakout developed in September 2007, when the price moved above $690. This level had been a very powerful long-term resistance level. It wasn't surprising when the market retested the $690 level in 2008 and used this as a support and rebound level.

The location of support and resistance levels is an important feature that defines the price activity. The rebound from support near $690 in November 2008 was very rapid and the price moved above the long-term uptrend line in December 2008. This rise meant the long-term uptrend that had started in July, 2005, was again the most important support level for the uptrend.

Horizontal support and resistance levels had developed near $840 and $930. The strongest resistance level is near $1,000. The $840 level was a weak resistance level in 2007 and it has been a middle point consolidation level in 2008. This combination of long term uptrend line and support and resistance levels defines the way the trend will move towards resistance at $1,000.

The combination of resistance near $690 and the long-term trend line in 2005 to 2007 created an up sloping triangle pattern. The target for this chart pattern is $930. This level has acted as a new resistance level several times since the end of 2007. A move above the $930 level is bullish and establishes the condition necessary for a strong rally towards $1,000.

More From CNBC.com

A retreat from the $930 area can test support from the long term uptrend line. This support is currently near $865. The level of this support continues to rise as the up trend line develops. This increases the upwards pressure on the price and increases the probability of a successful rally to resistance at $1,000.

A successful breakout above $1,000 has a first target near $1,150 and a long-term target near $1,300. These price levels may take many months to achieve. Traders watch for price to move above or below the significant trend line and support/resistance levels before they take action.





If you would like Daryl to chart a specific stock, commodity or currency, please write to us at ChartingAsia@cnbc.com. We welcome all questions, comments and requests.

CNBC assumes no responsibility for any losses, damages or liability whatsoever suffered or incurred by any person, resulting from or attributable to the use of the information published on this site. User is using this information at his/her sole risk.