Bullion Charts & Commentary
posted Aug 7, 2005 at 01:28AM
We have been here before. Will the bulls get satisfaction? Right now I am leaning towards a quick retest of the break-out point and/or the 200 dma. A move northwards from there is as strong a confirmatory bull signal as you can ask for.
As long as bullion stays above 420 the benifit of the doubt remains with the bulls.
A busy chart. I am disposed to look at this price action as being bullish. There are bearish interpretations which are possible, but I am of the mind they support the wall of worry.
HUI - A Closer Look
For new readers again the big time disclaimer that my EWA "skills" are definitely at the hacker level. Still I see an impulsive movement, (during which we had outperformance against a variety of metrics) followed by an overlapping price sturcture. From a time point of view this correction has been overlong and something has to give soon.
Still I see any move down to 190 as an attempt of the bull trying to shake off clinging swing traders, and a move that should be bought by same.
The .45 level is the key support metric. The sphinctor factor goes way up if this gets broken. A break of the main resistance trend-line would be a HUGE technical event.
It is still too early to say the dollar is dead. I still think we need a "channel buster" close under 87.5 or 87 before really talking about a move back down to its 200 dma.
Keeping an eye on the weekly MACD
I am itching to fill these pages with insightful geo-political and socio-economic commentary. All of it as counterpoint to a lot of the guff that is appearing on financial pages across the web. Alas the need to sort out compound mitre cuts will spare you this invigorating experience...for now.
So how about the gold sector? We are at a point I think where we will soon find out if the market believes the chinese reevaluation story will give gold the sustained strength to start a new major leg up and plow through technical conditions on the daily charts, which are moving into overbought.
On a larger scale there is no real technical obstacle to hinder this development. Measured against other currencies, bullion has retested previous break-out points and has confirmed them as support. All support trend-line on a short, intermediate and long-term basis (four years) all continue to hold.
The techncial condition of the weekly charts certainly have the scope to support long bullish moves in the sector.
I think, from a short-term view, that the use of the 50 dma on the respective USD and bullion charts is a good metric to watch. If pressed I would say to expect these metrics to be retested and confirmed as resistance and support respectively.
The one semi-red herring is the potential for the USD to put in one more leg up after mucking about in a corrective pattern. This to finish off a terminal impulsive C wave affair and most likely put in technical divergences on the weekly time-scales. This would set the stage for the next major down-leg
The other red herring to keep in the back of one's mind is if the US and China start getting involved in a war of economic MAD (Mutual Assured Destruction). Such an event I think could result in Prechtorian style deflation which would NOT be good for gold.
Personally my strategy is to just basically hold on to my current gold exposure and let it ride. This kind of environment for short-term trading is not my forte. I get much better results playing bounces in oversold markets, than trying to play the ebb and flow of movements already under way.
"Know thyself" and your trading skill set really becomes important here.