BullMarketRun - Another Chart Shows Gold Has LikelJanuary 27, 2011
At BMR we closely track the CDNXand we use this Index, consisting mostly of speculative junior resourcestocks, as our #1 leading indicator of the future direction of Gold prices and commodities in general. By gauging the CDNX, we were able to correctly call important bottoms in the Gold market last February and July. What the CDNX is telling us now, which other indicators are also showing, is that Gold is also bottoming out here in late January.
This morning John takes a look at Gold from a different angle as he analyzes the SPDR Gold Trust Shares ETF which trades on the NYSE:
John: The purpose of this article is to present graphically why I believe Gold has found a bottom this week or is in the process of doing so. I have chosen the SPDR Gold Trust Shares (GLD, NYSE) to represent Goldbecause being shares the chart shows the volume so the Chaikin MoneyFlow (CMF) indicator can be included to illustrate buying pressure.Yesterday, GLD opened at 129.83, fell to a low of129.28 and then climbed to a high of 131.17 before closing at 131.16 onvolume of 21 million shares for a gain of 1.06 (0.81%).
Looking at the 3-year weekly chart we see that the price of theshares from July, 2009, to now has been a series of bounces on anupsloping trendline (green). We are only interested in the points atwhich the price touches the trendline. These points occurred inFebruary and August of last year and again this week. By analyzingprice behavior and indicators from those periods we should be able todeduce what the probable scenario is for the near future.
A vertical green line has been drawn through each of the points soit is easy to compare price and indicator reactions at those times.
February/10 and Aug/10
Price: In both cases the price made an immediate bullish reversal and continued to climb to a new high 4-5 months later.
RSI: In both cases the RSI bounced up off the support at 53% and continued to climb toward the 70% level.
Volume: In both cases the average volume turned bullish and over time tended to rise as the price rose.
Slow Stochastics: In both cases the %K (blackline) bottomed and reversed upwards and crossed above the %D (red line)which also bottomed and reversed exactly at these price reversalpoints.
Chaikin Money Flow (CMF): In Feb/10 the CMF valuewas about zero and in Aug/10 the value was about .30, so the actual CMFlevel appears to have little bearing on price behavior but obviously arising CMF value at a reversal point will have a positive effect.
Today
Price: This week’s candle so far is a doji, indicating indecision and is right on the trendline.
RSI: The RSI is sitting on the 53% level support and flat.
Volume: The volume is bullish and although this is showing only 3 days volume it’s almost equal to last week’s.
Slow Stochastics: The %K is starting to flatten and the %D is still pointing down.
Chaikin Money Flow (CMF): The CMF value at 0.102 is about twice that of last week.
Outlook: The price pattern and the indicators replicate the two previous patterns after Feb/10 and Aug/10 and point to a probable and imminent share price reversal.
Source:
https://www.bullmarketrun.com/?p=4996
Guy