Gold is flashing a counter-intuitive message now. Logic says that gold should do well in this environment where banks and other stores of value are threatened. And yet, as capital destruction forces people to raise cash, gold becomes just another commodity to be sold. Curiously, the daily and weekly charts seem to encapsulate this analytical dichotomy. The daily gold is flashing warning signs here, with two RSI sell divergences in recent days as well as the Cycle-Trap turning down yesterday. So gold appears to face resistance to further gains. The weekly chart is bullish however. But note how the 920-930 are on the weekly chart has formed net-lines (both buy and sell) four times in recent months. This area is serious resitance for now. Support is also clearly defined on the chart around 840. I’m looking for near-term weakness and would add to long positions on any selloff into the 850 zone.
click chart to enlarge
click chart to enlarge
1 response so far ↓
1 Peter VC // Oct 1, 2008 at 11:54 am
The SC measures from emotional high to high or low to low. But what is an emotional low for the capital market may or may not be the same for e.g. the bond or gold market. How does the SC differentiate ? I never figured out that one…
You must log in to post a comment.