Thomas
DeChastelain
Memorial Archives

Bullion Charts and Commentary
posted Sep 17, 2005 at 01:38AM

Again a very constructive week. Let's just get straight to the charts as there are quite a few that I want to go through and that I think are worthy of your attention.

Bullion Daily



Imagine if the dollar had retested its lows and gold came nowhere near testing its previous highs? What we have here is the exact opposite. Very bullish divergence against USD price action, and clear indication that a new major leg is upon us.

Bullion Weekly



Remains in full-fledged bull mode.

Bullion Monthly



We have a measured move objective in the $560 area.

HUI Big Picture



Right now on the basis of bullion outperformance in both the USD and XEU, as well as the HUI/Gold Ratio breakout (see below), one has to give the nod to a new major impulsive leg underway.

HUI Daily



Strong momentum has brought things to overbought territory. Right now I am expecting any retracement to have a corrective nature.

Dow Jones Precious Metals Index



Ditto.

HUI/Gold Ratio



This is a very bullish technical event. One might still see some retesting and confirmation which is a common market behaviour

HUI/Gold Ratio Big Picture



Again one can see the bullish implications. things are not quite the same as past occurences. There is still work to do to exceed old highs, something which occured more quickly in the past.

Unhedged vs Hedged



Actually I was surprised. I find this chart bearish. Something to keep in mind, but not enough to outweigh the bullish price action.

USD Daily



Again until it closes over the 50dma, one can assume that the USD remains in bear mode

USD Weekly



From a sheer chart perspective the USD can go either way here.

Trading Strategies/Discussion.

Again just to start with the disclaimer that everyone's circumstances are different, and one should not see my "advice" as a one shoe fits all. Indeed it is not unusual for me not to follow what was written.

I started with six stocks, entered into when the HUI crossed its 18 ema. Right now I have none, having sold the remaining stocks this week including two which I held for only days. For rationalization, I would go to opportunistic profit-taking, portfolio mangement (wanting to keep certain cash levels) and the desire to overhaul trading vehicles.

What happened to buy and hold? Call it weak knees. In the end being a swing trader is my default psychology. So when the sector reaches major resistance trend-lines in overbought condition, I instinctively sell. Basically it is caution, and wanting to see what the next retracement looks like.

But for those of you who are holding on tight to their shares, there is much to take encouragment from. Bullion is on fire - climbing in the face of a rising USD, surging against the Euro. The HUI/Gold ratio has put in a major buy signal.

Then there is the channel busting move on the monthly charts.

The USD is up against resistance. If the 50dma holds and the USD starts another downleg then we could see gold doing a bit of a melt-up.

So, as far as the gold sector goes, I will start the next week in observation mode. Given the overbought condition any trades will be short-term momentum affairs with tight stops. Most likely I will just wait for the next retracement and/or a pull-back to some support trend-lines.

Good trading,

Bullet Bullet Bullet