This chart is in response to a query from a reader....
The intermediate term shows the bears still in control of this issue. The downtrend was interrupted in late July. Since then ABX has been moving in a sideways or consolidation pattern. Price remains well below the key 50 week moving average.
The ADX is beginning to turn higher indicating the possibility that this stock could be resuming its bearish trend lower. Bulls cannot allow the price to fall below the July low or further losses will be seen.
If the bulls can take price past $22.50, they will regain control of the stock.
Here are some gold charts once again to take a look at where things stand in that market.
Let's start with the Daily....
Note I am only using the ADX on these charts as I am trying to discern a TREND change.
The first thing to notice is that the ADX line has now turned down from a high level (above 43). That tells us that the downtrend has been temporarily halted. I have noted previous downturns in the ADX by ellipses. Note that the market has experienced some upward moves in price that followed such events. Therefore, the POSSIBILITY exists that we could see a relief rally in gold.
In my view, this will only occur IF the bulls can take price through the overhead resistance line I have noted. If that were to occur, you could see enough short covering to take the price up towards the 50 moving average which is currently moving lower ( the trend has been down) and which comes in near the $1292 level.
While the ADX has turned down indicating that the current leg lower has stalled out, the Negative Directional Indicator ( Red Line ) remains above the Positive Directional Indicator ( Blue Line) indicating that the Bears are still in control of this market on the daily time frame. I do not see any bullish divergences among those indicators at this time.
Let's shift now to the Weekly Chart...
Can you see the difference in the ADX line on this time frame? While it did turn down late in July indicating the disruption of the intermediate term downtrend, it HAS NOT TURNED DOWN at this time. Actually it is NOW RISING. Translation - on this intermediate time frame, the downtrend in gold appears to be resuming. That is in stark contrast to the daily chart.
Keep this in mind - all trend changes will FIRST be detected on the Daily Chart. Later action will then determine whether or not such a trend change is occurring as well on the intermediate or Weekly Chart or whether this is just another move higher in an ongoing bear market. One really has no way of knowing this at this stage. Only viewing subsequent price action can determine this. It is important to note however that the longer the time frame used, the more important the trend. What this means is that the onus is on the bulls to prove that control of the market by the bears is in jeopardy.
Note that the Negative Directional Movement Indicator ( Red Line ) is firmly above the Positive Directional Movement Indicator ( Blue Line ). The Bears are firmly in charge on the intermediate time frame.
Generally speaking, rallies in gold will thus be sold until proven otherwise.
