Bad Assed Trader: I've discovered some of my discipline and have made recent progress in catching up with my analysis of the trades going back to June. I've also noticed that my trading has improved a little recently and I'm currently ahead this month which is encouraging.
So I've been doing a look-ahead analysis to see what might be setting up in the next week or two and noticed interesting signs on gold.
Now I haven't done much trading of gold and when I have it hasn't generally been successful but I still like to watch it to see where it's going as everyone likes to talk about it. I'm just looking at the charts to see what's happening and thought I'd record it on my blog.
Firstly, the monthly chart (left) shows just how much gold has shot up - it shows something akin to an exponential curve, which is why everyone keeps harping on about it. It is pretty meteoric and I'm not going to be the first one to say that's all about to change in the medium to longer term.
So what about the shorter term? Would you want to buy gold right now? With all the problems everywhere else - the falling FTSE, the artificially deflated Swissie and Yen, there don't seem to be many safe havens other than gold so you may think it's the best bet. And you may well be right and I may miss out on something really amazing but I won't be going for gold myself just yet.
Why? Only two things really, both of which show on the daily chart (right).
The first is that price action shows difficulty breaching the 1900 level. Understandable as this is a new high, but the rejection of that price level is pretty sharp on both occasions with strong selling coming in as soon as price gets there (2 long red bars taking price back down from the level I've marked with the red horizontal line).
The second is the divergence of the MACD indicator (see bottom of the chart, the two peaks connected by the thick green line). This indicates that when price rose the second time to the 1900 level it had less potential to continue to rise than the first time. I suppose this means that buyers are thinning out considerably at that point.
I looked back in time at the Gold chart to see what happened when MACD diverged previously and found the section shown left which was during November 2010 to January 2011.
Three times price tried to breach the 1430 level but got beaten back and each time the peak on MACD was lower than when price had peaked at 1387. Sure enough, before price could rise again it needed to drop and touch the long term trend line (the straight blue line between the pink 120MA and green 200MA lines).
My feeling is that gold needs to get rid of a few sellers by dropping off a bit before it will be able to pick up sufficient buying momentum to crack categorically through that 1900 level and push north again in line with its underlying trend.
Strangely enough, whilst I've been putting this blog together this morning Gold has been quietly tanking on the 5 minute chart (see left) with big chunks of selling coming into play.
I think it'll come down further over the next few weeks maybe to about 1750, before pushing back up again. It may bounce up a little, like it did before, to make a third attempt to breach 1900 but I don't think it will make that breach until it's drawn some breath by dipping. And when it dips, then I might get interested in looking for a buying opportunity....
So I've been doing a look-ahead analysis to see what might be setting up in the next week or two and noticed interesting signs on gold.
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| Gold on the monthly chart: Meteoric |
Firstly, the monthly chart (left) shows just how much gold has shot up - it shows something akin to an exponential curve, which is why everyone keeps harping on about it. It is pretty meteoric and I'm not going to be the first one to say that's all about to change in the medium to longer term.
So what about the shorter term? Would you want to buy gold right now? With all the problems everywhere else - the falling FTSE, the artificially deflated Swissie and Yen, there don't seem to be many safe havens other than gold so you may think it's the best bet. And you may well be right and I may miss out on something really amazing but I won't be going for gold myself just yet.
 |
| MACD Divergence on Gold over the last week or so |
The first is that price action shows difficulty breaching the 1900 level. Understandable as this is a new high, but the rejection of that price level is pretty sharp on both occasions with strong selling coming in as soon as price gets there (2 long red bars taking price back down from the level I've marked with the red horizontal line).
The second is the divergence of the MACD indicator (see bottom of the chart, the two peaks connected by the thick green line). This indicates that when price rose the second time to the 1900 level it had less potential to continue to rise than the first time. I suppose this means that buyers are thinning out considerably at that point.
 |
| Gold MACD divergence during winter 2010 |
Three times price tried to breach the 1430 level but got beaten back and each time the peak on MACD was lower than when price had peaked at 1387. Sure enough, before price could rise again it needed to drop and touch the long term trend line (the straight blue line between the pink 120MA and green 200MA lines).
My feeling is that gold needs to get rid of a few sellers by dropping off a bit before it will be able to pick up sufficient buying momentum to crack categorically through that 1900 level and push north again in line with its underlying trend.
 |
| Gold this morning on the 5 minute chart |
Strangely enough, whilst I've been putting this blog together this morning Gold has been quietly tanking on the 5 minute chart (see left) with big chunks of selling coming into play.
I think it'll come down further over the next few weeks maybe to about 1750, before pushing back up again. It may bounce up a little, like it did before, to make a third attempt to breach 1900 but I don't think it will make that breach until it's drawn some breath by dipping. And when it dips, then I might get interested in looking for a buying opportunity....
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