Gold Sector Chart Update
posted Oct 15, 2005 at 12:46AM
Watch out for a potential ending diagonal that goes above channel resistances but morphs into a Clif Drokian "channel buster".
Again from a purely technical perspective, this is not the ideal condition to initiate positions.
A first set of lower highs and lower lows.
HUI Gold Ratio
Still good but testing some key support metrics.
US Dollar Daily
US Dollar Weekly
But how? A strong move over 90 carries tremendously bullish implications from a technical perspective. A classic case of linear logic putting the boots to big picture considerations. In the same way if you are a retired school teacher and the cops are turning your face into paste - putting your arms up to defend yourself is considered "resisting arrest"
It doesn't matter...there is a reason why the "market" is always right.
Although the sector was down, everything remains in the realm of consolidation (backing and filling). I don't have anything to say that is different from last week's commentary.
The only motherhood bromide I would add is to base your gold trading decisions on the gold charts themselves, and not to be influenced too much by the USD. If bullion has detached from the USD, then USD strength will not necessarily result in comparable gold weakness.
At the same time, I do think that if the USD puts in a strong decisive move over 90, it will be difficult for gold bulls to push things up as they are fighting through some significant resistance zones, particularly bullion.