“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Saturday, July 13, 2013

Some Chart Analysis on Gold

In light of the recent apparent reversal by Fed Chairman Ben Bernanke when it comes to the timeline for any TAPERING of the Fed's Bond Buying program, affectionately known as "QE" for short (I like to think it stands for QUICK and EASY profits for Wall Street), I felt it might be a good idea to take a look at where gold stands on the technical price charts.

Let's start off with the Daily Chart only as I am pressed for time but wanted to get something posted for the readers. Note also I am using an old but very reliable technical indicator known as the Directional Movement Index. I like this index because it is basically a trending indicator. It is thus very useful for determining whether a market is in a TRENDING pattern or whether it is in a sideways or NON-TRENDING pattern.

A quick primer on this indicator is therefore in order before proceeding - it consists of THREE lines; two of them are DIRECTIONAL INDICATORS ( +DMI and -DMI ); the third is the TRENDING INDICATOR ( ADX ).

You can see those noted on the chart. The +DMI or positive directional movement indicator is the blue line; the -DMI or negative directional movement indicator is the red line and the ADX is the dark purple line.



When prices are moving higher, the +DMI will move higher and the -DMI will move lower with the result that +DMI will BE ABOVE -DMI.

When prices are moving lower, the -DMI will move higher while the +DMI will move lower with the result that -DMI will be ABOVE +DMI.

If the blue line is rising therefore and remains above the red line, the price is rising.

If the red line is moving higher and remains above the blue line, the price is falling.

That takes some getting used to among those new to using this indicator but once that is understood, the direction of price is very easily seen by a quick glance at the respective lines.

The third indicator, the ADX (purple line) will rise whenever a market is in a trend and fall when the trend is ending. When the market is moving sideways or is trendless, the ADX will move lower until a new trend emerges (either up or down; it doesn't matter) when the ADX will begin to rise once more.

When a market is in a strong uptrend, you will have the +DMI moving higher with the -DMI moving lower  with the +DMI remaining ABOVE the -DMI. You will also have the ADX rising.

When the market is in a strong downtrend, you will have the -DMI rising with the +DMI falling with the -DMI remaining above the +DMI. You will also have the ADX rising.

That being said, look at the chart and see if you determine whether or not gold is in a trend and if so, what that trend has been, up or down? If you chose DOWN, you win the stuffed animal prize.

Can you see how the red line crossed above the blue line back in November of last year? That was your sell signal in gold. It was also an early warning of the impending break of downside horizontal chart support at the critical $1680 level.

Note at that time the ADX was down below 15 indicating the lack of a trending move as it had already turned lower upon the inability of gold to clear $1760. The downside crossover of the blue line  ( +DMI ) below the red line ( - DMI ) was a warning to bulls to book profits or at least protect profits, not necessarily go short.

From the point of the upside crossing of the red line above the blue line in November, this market was to be traded from the short side notwithstanding all that claptrap about gold backwardation, etc.



Now look at the ADX during the time inside the rectangle. You can see that gold was making up its mind whether to continue moving sideways or break lower. The ADX was not moving higher but was stuck in a sideways to lower pattern between 20 and 15 indicating the lack of trend. Once the price broke down below horizontal chart support at the $1640 level, the ADX began to turn up and cleared the 20 level indicating that a downtrend was forming. Note all the while this is occurring, the red line remains above the blue line. Negative directional movement is dominating the chart. This means one DOES NOT BUY no matter what the various headlines some in the gold community were posting on their websites.

From that point on, the ADX continues rise with a few brief periods of mild dips in it before it goes on to rise to new highs. It is now turning down from a very lofty level up near 45 which indicates there is currently a PAUSE in the downtrend, a downtrend which I might add has been very strong and very long in the tooth.

However, while the red line is moving lower and the blue line is moving higher, the fact remains that the two directional lines have NOT CROSSED. What this means is that from a pure chart perspective, the current move higher in gold is nothing more than a rally in an ongoing bear market.

For this market to change complexion, I will need to see an UPSIDE CROSSOVER of the +DMI or blue line ABOVE the -DMI or red line. Keep in mind that because the downtrend in gold has been of such great extent and duration, the ADX will continue to move lower for a while even if price continues to ascend further. A way of interpreting this in English is to say that it will take quite a move higher in the price of gold to REVERSE the downtrend AND SIGNAL the start of a NEW UPTREND.



Remember, a market can end a trend without necessarily beginning a new trend in the opposite direction right away. By the way, have you noticed that DESCENDING 50 DAY MOVING AVERAGE? It is still some $80 or so ABOVE the current price so until or unless that average is cleared, bottom calling is ill-advised. Only short term, TRADEABLE BOTTOMS, are justified but those mean exactly what I stated, "SHORT TERM". I am attempting to illustrate here what the inputs are that are required before I personally will feel comfortable saying we have a MORE LASTING BOTTOM in gold. Perhaps we already do - then again, perhaps we do not. At this point this chart does not confirm a lasting bottom only a pause in an ongoing downtrend in the metal.

Lastly, the variables that one chooses to set up the indicator determine how quickly it will turn and give off trading signals. When it comes to gold, I prefer to use a bit longer than normal timing factor so as to weed out some noise and prevent false signals. This is however the daily chart. This same indicator can be used on all time frames down to 5 minutes if you want although I think the usefulness is pretty much over once you move down any shorter than a two hour chart to be honest.

I wish you readers to know that the reason I am writing this article is to help you to learn to think and trade or invest for yourselves and not be moved by every headline or the latest gold community buzz word or theory. Most of the people who write those websites ( not all of them)  make their livings by selling ads on them based on the number of hits. They have a vested interest therefore in generating as much website traffic as possible as it increases their monthly checks. Those of us who actually make our living IN THE MARKET, have no such luxury but must be prudent. One can find experienced traders and one can find reckless traders but one will search in vain for EXPERIENCED AND RECKLESS traders. There are no such creatures as any of the reckless ones have long ago become road pizzas on the trading floor of the exchanges having failed to survive as Traders long enough to actually have gained enough experience to know what the hell they are prattling about.

One more reminder, this is not a Holy Grail of an indicator. It is just one of many that I use in my tool box. Some are more responsive; others less so. But what I try to do is to use is several trusted indicators to develop a consensus and then tie those in to various support and resistance levels including Fibonacci retracement levels to determine how to approach a particular market. Along those lines you might want to check in with my friend, Trader Garrett, whose website is listed in the favorites section over on the right hand side of this blog. He is also a veteran trader and both of us share the same philosophy when it comes to putting our hard-earned capital at risk in a market. Neither of us are given to sensationalism. Hard nosed realism is the key to survival if you are going to trade in these markets.

Keep in mind an old axiom of mine that sums up how I feel about the need for humility. Opinions are like armpits. Everyone has two of them and they all stink. The only opinion that ultimately matters is price action and whether or not you are on the right side or the wrong side.




52 comments:

  1. Does anyone know how we can recreate this chart (+DMI, -DMI, ADX)? I tried to replicate inside my Scottrade account to no avail. Is there possibly a website we could use?

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  2. EXCELLENT article Dan! I too would be interested in replicating your charts if I could.

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  3. Thanks Dan. I will see if I can find the software necessary to replicate. You amaze me with your willingness to help.

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  4. Really appreciate this article, I find it extremely helpfull this. Learn a man how to fish and....

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    Replies
    1. Jasper,
      This is my sentiment exactly. I was thinking of the exact same thing. The manipulators are getting more and more advanced and suckering us in more and more. This past run down from Nov 2011 hurt me a bit. Now, much more conservative with amount of $ to attempt to invest. I know the long run, but due to restraints of trading account, difficult to keep in and out, in and out, so this tool seems a another tool rather than the RSI's, Mov Agerages, volume, fundamentals before risking limited and precious capital. Dan is a help and knows not even how much.

      Delete
    2. Agreed White Wolf. Make sure you have a look at the Trader Garrett post too. I backtested his system on one of the miners I own - I could have made a fortune with that kind of knowledge over the last year. Never too late...

      Delete
    3. How did you backtest his system? I had a look at his blog and I found only descriptions/analysis of his system but not the system itself?
      Could you please give a link to his system?

      Delete
  5. Stockcharts.com or ThinkorSwim both have the indicator-must chart programs should have it.

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  6. This comment has been removed by the author.

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  7. Thank you again Dan.

    Questions if possible:
    Are you saying that the ONLY time this chart should be used is when the 2 lines crossover? Until then there is really no way to know what is going to happen (higher or lower) except that the trend is still the same?

    Don't we get the same kind of signals with moving averages and their respective crossover (20, 50, 200)?

    Do we get fake signals with DMI crossover?

    Is this a late or early indicator?

    Finally, Do you use specific parameters for ADX? When I use Stockcharts my ADX line is up in February while yours is flat.

    ReplyDelete
    Replies
    1. Hubert, chaeck Trader Garrett he used three indicators and only then the last one confirms he trades. I found its a little too slow for the miners, one shall have to be prepared to anticipate the last of the three signals a little for the miners imo but when one does that it works fantastic on the miners. Ill be playing around with the parameters a little to see if it can provide the last of the three buy signals just a little earlier. Really on the miner I tested it, is makes 15% on days when all three indicators align.

      Delete
    2. Hubert;

      I use the ADX only as a trending indicator. As stated in the missive, it is just one of many indicators that I use and is not meant to be some sort of Holy Grail indicator. I have several proprietary indicators that I have developed which I will not share publicly because I am not going to give away all my tricks, especially not for free! :o)

      You can plug in whatever time frame you want for use with this indicator or any other indicator for that matter. The shorter the time duration, the faster the indicator will respond but the more false signals you will get.

      What this indicator is currently telling me is that gold is in a bearish downtrend but that trend is seeing a pause in an ongoing intermediate downtrend. It does not yet indicate a reversal of the downtrend.

      Keep in mind that we have seen a massive plunge in the price of gold. It is only normal to see some sort of recovery, especially seeing that Mr. Bernanke shocked and stunned the entire financial community last Wednesday. It is nice to see the metal trading higher but until we see a much larger recovery in price, all the charts are telling me right now (at this time) is that we are seeing a retracement higher in that downtrend.

      What is going to be key for gold, and has been, is if and when perceptions among the trading/investing community changes in regards to the threat of inflation. If that threat gain credibility among a larger number of market participants than it currently does, then gold will change trend.

      Delete
    3. Dan,
      Thanks for your reply.

      I do understand your last paragraph about "PERCEPTIONS among the trading/investing community changes in regards to the threat of INFLATION."

      ALL Western countries (and even more the USA) are "controlling" the rate of inflation, by changing the way it is calculated. The reason is very simple: The higher the inflation the higher payment to civil servants, public pensions, unemployed...and therefore higher the deficit!

      In Europe the real rate of inflation is a lot higher -due to the introduction of the euro many years ago- than the official rate of 1.6% for the EU. However even if it rises to 5%, the "threat of inflation" IN EUROPE will not trigger a rush to higher gold price.

      What will, is the perception that the threat of inflation is growing in the USA. However despite of the QE -which is inflationary- the "official" rate of inflation is "below the FED target".

      Therefore it is my opinion that we should follow what is happening with the USD because it is the proxy for higher inflation. I do link -right or wrong- the rise in the Treasury to exactly that: Protection of the USD in order to reduce the risk of "perceived" inflation. I am also, as stated here before, following the Yuan because it is another way to predict the value of the USD. When the "trading/investing community" perceives that the Yuan is the next world currency, they will get rid of the USD and then inflation will go wild in the States.

      When will this happen? The CHAOS seen in official circles is a sign that we are getting closer to the end. The recent flip-flop from Bernanke could be the last one as traders realize that he can NOT control what is going on anymore.
      Just my humble opinion.

      Delete
  8. Thanks for taking the time to explain the chart analysis. We all appreciate all your time and knowledge in these crazy and troubling times.

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  9. Hi,

    In ancient time there is no chart, chart only tell what is done in the past but what people normally get it wrong is we are trading the future.. So instead of looking back what had being done what need to be done.

    I am sorry.. I am not chartist as chart is like a fix box and theories to trade within a design formula... While in real world there is no formula to get rich in gamble unless you cheat..

    I used to do charting ... In the beginning it is ok, but the market evolve all the time just virus or parasite and importantly there is no rule of enagment anymore.

    Now a day , I see lot of confusion, unconfident , which by the way that is what manipulator are doing . I sometime do feel the same and try to look for the cure. But there is no cure... You need to evolve with the market.

    Importantly, once people get disconnect from reality and trade base on what market want to be then prepare to lose at the end of the market.

    Once upon the time, there used to be over brought and over sold indicator , and it used to be useful tool in doing trading... But now there is no more... Over brought or over sold.. This tool is broken

    Just consider my opinion is one of your armpit ..and smell different from what you would like to smell.

    This is age of manipulation , only understand manipulation then you would not fall into the prey.

    Bond is an example.

    I come with good faith ... Disagree or agree just feedback with positive.

    Cheer guy.

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  10. thanks dan....im 2 years into specifically gold investing/trading, and i need all the extra skills i can acquire, cos i was becoming road pizza...the main tools i use were RSI, MACD, volume, and general chart pattern and news that i could interpret...theres so much more to this but those big books on trading look too intimidating and i have not the time or resources for a whole university course, etc...of all i have read out there, your literature is the clearest and most elite. and its always very short and understandable. gracias!

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  11. Dan, I went back on your commentaries around Nov/Dec last year, and it does not seem you were using the +/- DMI at the time?

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  12. How about pulling up those eyepopping, jaw dropping 4 1/2 year charts of XRT or XLY?

    Wonder if GLD, CEF, or CEF will top that eventually?

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  13. This sort of post may be mind-numbing. Even though as i comprehend that evaluation, A lot of us once-in-a-lifetime.

    book marketing

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  14. He that sitteth in the heavens shall laugh: the Lord shall have them in derision. Psalms 2:4 (KJV)

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  15. It seems to me, Trader Dan, that you are rudely dismissing those that look at backwardation in gold and yet you have not in any way substantively refuted it. It should also be noted that GOFO went negative, and gold had its best week in two years. Perhaps you can make a substantive rebuttal other than an ad hominem?

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    1. Stuart Unger;
      I am only going to make one reply to your post as I have wasted enough of my time over the past few months refuting those who managed to cost any dupes that followed them on that backwardation nonsense. If you have spent the least amount of time reading my comments in the past on this, back when gold was trading up near the $1600 level, you would have seen that I stated when THE STRUCTURE OF THE GOLD FUTURES MARKET confirms a backwardation, then the claim has merit and should be considered. THEN AND ONLY THEN.

      While the current spreads have tightened somewhat on the gold board, they are still showing a contango, not a backwardation structure. If that changes I will note it accordingly. Until then none of that chatter about backwardation means a single thing to me as a trader because the board structure does not confirm it.

      As for gold having its best week in two years, if you have the least bit of knowledge about the gold market, do you really believe that gold would have shot up through overhead chart resistance at $1260-$1265 if Ben Bernanke had not made his completely unexpected, completely out of the clear blue sky comment about QE continuing for the FORESEEABLE FUTURE? That comment sent the entire financial market system into total convulsion, especially the currency market because it was a total reversal of his comments made as recently as last month. Those comments alone are what sent the dollar sharply lower and gold sharply higher. Prior to that gold had recovered off the $1180 low but had been unable to breach overhead resistance at $1260- $1265.

      I am on record as stating here on this site that gold had moved down into the cost of production and thus would not stay down there very long. I looked for a move no lower than $1050.

      As far as your comments on that indicator thesis that I laid out, you can buy gold and go long anytime you choose to. I am more careful than others but then again, I am still doing this after having survived in the trading arena for more than 2 decades. If you want to take capital and throw it into the highly leveraged futures markets based on a whim or a theory, please, by all means, go right ahead. I wish you a great deal of luck if you mean to be a trader because God knows, you are going to need it.

      Again, this is the last response you will have from me on this matter.

      Delete
    2. Well Dan I appreciate the thoughtful reply. I will admit that of course BB's comments had an effect on the gold market, but I also don't believe negative GOFO, a sharply dropping inventory everywhere and consistently recurring (but not sustained) backwardation in gold to be mutually exclusive. It's simply your seemingly personal dismissal of anyone who brings up its relevance that I'm taking some umbrage with.

      PS I don;t trade, I stack.

      Delete
  16. It should also be noted that if one waited for the red and blue line to cross earlier on the chart they would have missed quite a move to the upside.

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  17. seems to me that the recent posts have become moreso moronic and belligerent, which to me says that perma bulls are in dire straits and have over-committed. my favorite tired bull argument is the one about the $ being no good. it is all relative, but the fact is that the $ bottomed 2-6 years ago vs. the various currencies; nothing new here, move along; steve in sparks, nv

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  18. Just in case people would like to read, Jim's commentary, please see attached below:

    Posted July 13th, 2013 at 4:03 PM (CST)
    "Gold will now rise to $1650 then react after which it will challenge and exceed the old high.

    If paper gold survives this move for physical gold’s emancipation from fraudulent paper as the price determinant, gold will still trade at $3200 to $3500 per ounce.

    If, as I believe, the new Russian and Singapore physical gold exchanges plus more physical gold exchanges that will open become the price discovery mechanism for gold, then gold will trade at $50,000 per ounce.

    Respectfully yours,
    Jim"

    $50,000 per ounce!!! Sounds unlikely but if this is true, what a day this would be!!! What kind of world would we be living in? Would milk at this time cost $200? haha

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  19. He is setting up himself and his followers for just another big loss. Though one must be an idiot still believing to Sinclair after so many false allegations and nonsensical statements.

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    1. I don't think he is setting up his followers for another big loss intentionally though as I think he genuinely believes (whether right or wrong) what he states. I guess it's up to his 'followers' to do their own homework rather than buying (gold and/or silver) according to his statements. They need to be responsible for their own money and decisions on how to trade or invest it.

      I do not condone his method of commentary as more often than not, he will state something like it is set in stone, such as, "Gold will now rise to $1650..." or "the bottom is in" giving his "followers" the illusion that he can somehow predict the future prices. However, if you are merely a 'follower' without doing your own analysis and thinking, then there could be bad consequences.

      Delete
  20. I understand your frustration Stuart!! Like all of us here the "shock and awe" of these moves are like giant knives to the heart. In reality it was my stubbornness that led to some losses. Dan was very clear. I am beginning to understand what the powers that be want. They want it all, more and are fighting for control of the world financial markets to keep their long term welfare intact. They are will do this to the bitter end and care not about anyone, anything and are completely without moral compass. I now believe that part of the game being played is the takeover of the domestic mining industry. What better way for Wall street than to continue to drive the price of gold under the cost of production. They already control the price mechanism from the producers through assayers, to the Comex futures. If they have less and less gold they need the future gold production to stay alive. Due to very nature of the Gold Mining the need for large capital machinery and equipment, processing and labor costs, they own the miners lines and can control their ability to continue mining with their need to keep digging with replacement. It is really sad, but consolidation is going to happen. I am sure they already have made alliance with some miners and have targeted their prey. It is best to listen to Dan now. Eventually they may lose due to the North American Market's limitations, but, it is one more step down the food chain for these men of destruction. Good luck.

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  21. Dan, is this more misinformation?
    http://www.bloomberg.com/news/2013-07-14/hedge-funds-bought-gold-in-biggest-rally-since-2011-commodities.html

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    1. White Wolf;

      I wouldn't say this it is more "disinformation" but the report about the CFTC Commitment of Traders was used incorrectly. In reading this article, one gets the distinct impression that the reporter believes that the Bernanke comments spurred hedge funds to go long on gold as well as some other commodities. The problem is that he is inaccurate. That report only covers the positioning of traders through TUESDAY of the week. Bernanke's did not make his now famous comment about "until the foreseeable future" until WEDNESDAY! In other words, the hedge funds, or anyone else for that matter, besides Bernanke, had no idea that the Central Banker was going to make those comments and upset the entire world financial system by total contradicting his comments made in June.

      This is a perfect example of lazy reporters failing to do their homework and drawing inaccurate conclusions. I am of the opinion of the analyst quoted under the paragraph heading, "STRONG DOLLAR" where he states "a bounce doesn't a bull market make". That is what I think we are seeing in gold and will remain that way until I see evidence of a change in sentiment which will require, at a bare minimum, a change in the handle from "12" to "13" on gold which refuses to then go back under 13.

      I still think we have to deal with a stronger Dollar in an environment in which interest rates are going to continue to rise. Only if inflation fears begin to replace fears of mediocre growth will we see gold begin to reverse the intermediate term downtrend. The Dollar would also have to come under more pressure against the majors, especially the Euro. Right now that currency pair seems to be stuck in a sideways pattern between 1.32 and 1.28. If the Euro were to break out of this pattern, and especially if it were to clear 1.34, then I believe gold would move through $1300 rather easily.

      We will have to wait and see....

      Delete
    2. I have the feeeling that the pair EUR/USD is kind of stuck around 1,30 because of the Status Quo between Fed and ECB.
      Fed may want a weaker dollar, but Germany sure won't.
      Inside Europe, there is a thin equilibrium point between southern countries who need a weaker euro, and once more "stronger" economies such as Germany and some of its neighbours.
      Sounds that in this "currency wars" environment, central banks are pushing their pawns so that neither ECB nor Fed finds itself in an unsustainable situation, and it feels like 1,30 is more or less a level accepted by all.

      For Bernanke's change of speech hardly one month after the previous one, maybe this is the reflection of his previous position being in direct conflict with his "masters'" bankers, politicians and oligarchs. After all, Obama said he stayed there more than he wanted to.
      QE to infinity, as Sinclair mentionned (as long as USD index allows it by not plumetting too much).

      Delete
    3. Hubert,

      Watch this Wed, he will talk up taper again to bust the bond yield movement downward. He has to. What a crock. Exhausting. They are hard at work to keep the 13 Handle off the chart.

      Delete
  22. Thank you Dan for your insight and information.

    I still have a core position but I am waiting on the sidelines until I see a change in trend.
    Patience is key.
    You are appreciated.

    ReplyDelete
  23. July 15, 2013 on king world news:
    Ron Rosen (don't know who is) remarks,
    “We are on the verge of the biggest move in the history of the precious metals market, and it’s not far away from beginning. It’s going to be a monster move....“What I don’t understand is why everybody doesn’t see it. There are so many analysts out there and if they just knew how to look at a monthly chart, and put it in a logarithmic form, they would see that gold and silver are going to explode. This explosion higher in the price of gold and silver will just be Mother Nature at work, and there is nothing on the face of this Earth that can stop it -- no individual, no central bank, no country, and no collection of countries.”

    Perhaps he is not taking into consideration the large short positions that the specs still have and all the other factors such as the Indian (largest consumer of gold) policy makers with their gold buying tightening measures, etc etc?
    Regardless, he does make his commentary very exciting! haha

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    Replies
    1. " “We are on the verge of the biggest move in the history of the precious metals market, and it’s not far away from beginning. It’s going to be a monster move....“ - What I don’t understand is why everybody doesn’t see it."

      Because we've heard this same sentence over and over and over again for the last 3 years on KWN and other websites, whatever the conditions.
      It is the unending, constant position of some speakers such as James Turk, etc...
      Whatever happens, the speech is always the same.
      Find the archives of their speeches, you will see they always predicted, every time, that we were on the verge of a major upward explosion of gold and silver prices.
      You know this tale about the kid who was shouting "wolf! wolf!" all the time?

      The day the wolf really came, noone in the village was paying attention to his shoutings anymore.

      Delete
    2. Good point Hubert.
      Not too surprisingly all of these super-bullish experts are somehow making money by selling gold bullion.
      I also fell into their trap until gold was in a bull-market.
      Too bad the trend has changed and they are still keep repeating the same mantra all the way down.
      By the time gold will return to bull market again all these people will lost any credibility.

      Delete
  24. Dear all,

    I find it interesting to watch prices through different time units (sorry about my English, I'm pretty tired today).

    1) bi-monthly time unit.
    interesting : the Bollinger inf going up is a support for the prices. On a long term point of view, this bollinger may act as a support and stop the bleeding, but we are under the ma20, so as Dan mentioned, there's a long way to go before the trend reverses up once more. But at least we identified a support area.

    2) bi-weekly time unit.
    interesting : if we imagine that we've reached a bottom and draw the Fibo retracement of the last 1805-1175 move down, it's nice to see that the Fibo retracement levels are fitting with the horizontal supports of most candles. Usually when it happens, retracements work well and give easy to follow targets in the price action. First fibo is 1325 $.

    http://s22.postimg.org/gv5uwshoh/gld_2w.jpg

    3) 2days-candles.
    interesting : see how the ema15 (black dotted line) and ma20 act as a resistance?
    They stopped dead the 3 last bounces on gold.

    http://s10.postimg.org/9tmmon2dl/gld_2d.png

    Conclusion : on this smaller time-unit chart, the first thing I'll wait for before changing my opinion about gold is to see a break through the ema15 and ma20. Which comes back to the same as Dan : prices must at least hold above 1300 level. Meanwhile, we still have a configuration as "ligne de poussée" which may push prices down once more. If you are short term or middle term traders, don't listen to those who have been calling for a bottom for the last 3 years, every single month. Eventually they will be right. You don't need to listen to those guys. Just follow the prices. If you are a long term investor and are stacking on the very long term for value and buy physical gold, that's a different story and I myself keep stacking little by little and progressively while prices go down.

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    Replies
    1. P.S : in terms of trading decisions, I would leave emotions where they should, somewhere in the closet.

      - fear of missing the uptrend train, or the "big short squeeze rallye". This fear may push you to buy gold now, just under main résistances (1300 $ then 1320$ and 1348$). What trader will buy under a resistance and sell on a support???

      If you are aggresive (like me) and like to play (like me, which is why I'm not a full time trader, I play more than a should :( ), at least wait to be back in contact to a short-term support on gold. I'd guess the nearest support area which could help the metal is 1260 $.
      It was a resistance on the way up. It was the resistance to be broken when Bernanke spoke. So this would be an interesting test. In TA terms, a median of Andrew's fork is going through this level on the 2days time unit. For information, I don't think I'll try to buy there, because it's a very short term trade which would target the 1325 - 1348 $ area, and I would have to be behind the screen all day to follow the support zone, and I can't.

      Delete
  25. Gold up and miners down.

    Looks like a possible new, world record low for GDX/GLD ratio.

    Meanwhile, retail stocks continue soaring into Outer Space, led by Starbucks, Whole Foods, and Nordstrom.

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    Replies
    1. Mark,
      It may only last a day, but today the GDX, GDXJ and a whole bunch of miners are up almost 5%, What are those Banks doing today? NOTHING but RED

      Delete
  26. Hey Hubert and Jim Silver!! And I thought I was the only one to read disgustedly the never ending bullish comments by the KWN shills; Remember how Egon had silver at new highs last Feb? Only a $30 miss. Keep up the good work Dan and btw, do you have any thoughts on PLV breaking to upside vs. GCV? thanks, steve in sparks

    ReplyDelete
    Replies
    1. "There are so many analysts out there and if they just knew how to look at a monthly chart, and put it in a logarithmic form, they would see that gold and silver are going to explode." Ron Rosen

      It's going to explode, Steve!! Get ready! (tongue in cheek)

      Delete
  27. big long drawn out distribution tops do not break out and bottom or top in 3 months like all the perma pm's would like; patience is the name of the game, Jim; take care

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  28. Not sure Steve, maybe..just maybe, Ben needs a little more room in that 10 year still over 2.50, and maybe the stock market will pitch a fit, and Ben will have to assume his standard position and BENDOVER some more to wall street. Still I am not adding or going in big as you are probably correct. Will beat the taper drum some more to deflate some air. Just continual FED speak to try to manipulate the markets.

    ReplyDelete
  29. White Wolf; between Bernanke, Greenspan, Krugman, Friedman, etc., is it any wonder why we are in such a mess? Where are Wm. McChesney Martin and Paul Volcker when we need them? steve

    ReplyDelete
  30. Thanks Dan, thank you for your time and the effort put into making the benchmarks so clear.

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  31. XAU, HUI charts impressive action today; maybe I have over-stayed my bearish position; steve in sparks

    ReplyDelete