Memorial Archives

Inverse Ratio Charts for Gold
posted Jul 6, 2004 at 05:47PM

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? Would you stand aside and wait for developments?

If you find the inverse chart "bullish" it means you are expecting BEARISH results in the real (un-inverted) world.

The reverse applies as well. If you find the inverse ratio chart "bearish" it means you are expecting BULLISH 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 Chart

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