A Different Look At Gold - Inverse Ratio Charts
posted Jun 6, 2004 at 12:59PM
In time I hope to present something more formal. In the recent past I have been experimenting with the use of inverse ratio charts as a means to more objectily analyze charts. Below are presented inverse charts for gold on a daily, weekly and monthly basis.
As a technical analyst do you find these patterns bullish? or bearish?
If you find the inverse chart "bullish" it means you are expecting BEARISH results in the real (un-inverted) world.
Again the basis for this is something I want to present more formally at a later date - but the intent is to find a way of looking at charts objectively without the baggage of pre-conceived notions. I believe there is merit here and I know it has already helped in a number of stock trades.
Some notes: If you want to experiment with this on your own it is important that you use "line" settings and not candlesticks...from what I understand the algorithms do not properly translate the latter.
By force of habit I have added some momentum indicators, but I have not verified wether there are any similar problems in that regard...are they calculated correctly? are there any "twists" in how one should interpret them?
So to play safe I suggest focusing on the price action..which in the end is what really counts anyways.
Daily Inverse Chart
Weekly Inverse Chart
Monthly Inverse Chart