If you have spent any time on my website you have probably noticed I am something of a nut about drawing trend lines on indicators. This little fascination of mine began several years ago and well, I guess it still fascinates me. I'm hopeless, huh?
Anyway, I decided to poke around with the RSI momentum indicator on a chart of gold and silver, and see what it would tell me. To no big surprise, my drawn trend line breaks on the indicator did a rather impressive job of telling me when price would go into a corrective mode.
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This first chart is that of daily $GOLD from www.stockcharts.com. Of course this musing is rather useless unless it can tell you something about the future, which I think it has. Take a look at the chart and see what you think.
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Click on the chart to ENLARGE
This second chart is that of daily $SILVER. Now I will be the first to tell you that these charts are more art than science, but it always amazes me that there still seems to be something worthwhile about the exercise. In this case, it appears there is reason to believe silver could very well have months ahead of it to continue higher. With the parabolic rise it has had so far, that seems a bit silly - but there it is on the chart for your consideration.
Finally, I was curious to explore the idea that sustained and continued Money Flow would be needed to propel gold higher if indeed, it is going to continue higher at this time. So I made this chart to get a feel for how the Money Flow Index has behaved in relation to the price of gold for the past many months, and see if it would give me some clues about where gold is headed at the present time.
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What I found out was about as bullish a setup as I could have dreamed up. Even better, I did not dream up a thing! There it is for you to consider. If I'm not mistaken, the TSI has just issued a BUY signal, money flow has been ramping up for a couple months while price has essentially consolidated while yet making higher highs and higher lows, and by golly, we just might be on our way to higher prices!
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I agree and have had a long position since Dec 20 @ 1384. I think I will wait until next year before I add to it.
ReplyDeleteI am nervous about the big banks taking advantage of the low volume to bid down the price and cover their short positions.
I suspect they did it a couple of days ago but gld did not fail, it climbed back higher. I guess that is nice for the banks that took longs when the price was down for a few hours.
Do you do any studies of the USDCAD forex? I am looking at it and thinking CAD has never managed to stay at par for long, maybe I should go long here looking for 1.02 or so.
Hi DEL - thanks for your question.
ReplyDelete1384? That's great! Sell at $1584, and you can really party. Give it about 3 more months.
I don't trade FX, but did give USDCAD a peek on the ThinkorSwim platform. The USD is now going to crash and burn, so not sure that betting it goes up against the CAD is going to work. The TSI has been below ZERO on that pair for months now - clearly saying that there is no reason to be bullish - as best I can tell.
Maybe look at buying some miners DEL?