Wednesday, 19 November 2014

Gold hits a wall

On Wednesday, gold hit a wall of resistance, and backed off hard, falling back under its descending coil formation (at the time of writing, well before the stock market close).

The action can be seen in the arithmetic chart of the gold ETF GLD, my proxy for the gold action:

Some investors insist the arithmetic charts should take precedence over logarithmic. I use both. In the arithmetic chart above, GLD appears to be backtesting a support turned resistance line going back to 2005.

With gold trading back under its descending coil (for now), the bulls are suddenly feeling the pressure again.

Sunday, 16 November 2014

What the bulls need to do to turn the tide

Everyone is watching the broken descending coil formation in gold to see if bulls can keep charging higher and invalidate the breakdown.

Invalidating the breakdown of that coil, should the bulls accomplish that, would be constructive, and would put wind in the sails of the bulls. It would get investor attention, that's for sure. At the same time, it would only be a tentative first step in turning the tide. It wouldn't be enough on its own to turn gold's chart convincingly bullish. The chart below -- which I've posted before -- shows why.

The task for bulls is nothing less than to reverse the breakdown of gold's bull market support line:

When gold broke down through its bull market support line, it was like an earthquake in the precious metals sector.

In the near term, only a sustained reversal of gold's "earthquake" breakdown will turn sentiment strongly bullish in my books, and convince investors the tide may have finally turned in the precious metals complex. That's a tall order.

Can the bulls pull it off? That remains to be seen. Given the breakdown in gold's bull market support line, I have my doubts. The bulls have their work cut out for them.

Friday, 14 November 2014

Has gold bottomed?

Gold soared on Friday, sending the miners higher sharply, as the U.S. dollar sagged.

That coil I showed in the previous post ended up breaking to the upside with vigour.

This begs the question: has gold bottomed?

So far, the evidence of a bottom is lacking. However, with Friday's strong action, gold has strongly back-tested its critical breakdown from a large descending coil, as shown in this chart of the gold ETF GLD, my proxy for the gold action.

IF gold can reverse that critical breakdown with conviction in the days ahead, it could be a whole new ball game.

Next week's market action is likely going to be important.

Thursday, 13 November 2014

Coiling for a move....

The bulls are looking for an upside break, while the bears are looking for the opposite. Gold is taking its sweet time deciding, unnerving both bulls and bears.

Monday, 10 November 2014

Big pop. Big drop.

With the big upside reversal in gold in Friday, many gold writers starting talking up the idea of a big rally coming. With gold's subsequent dive on Monday, the charts aren't backing up this rally scenario  -- at least not yet.

Here is a chart of the gold ETF GLD, my proxy for the gold action:

So far, the action looks like a classic backtest of a major breakdown. Time will tell.