GOLD is due for about a 30% +/- CORRECTION, let me convince you in this thread

reply to post by OBE1


Im sure there will be plenty of buyers around the 50 MA - but a RSI drop below the 50 mark wil be interesting if it happens

Problem with your theory buddy, is that the gold trade is not about gold at all. It a strict US Dollar trade right now, given that is a dollar and inflation hedge. So your charts and what not about gold, are charting them as if it was a stock. This does not work with commodities, I am sorry to say. If gold drops as much as you are indicating, there would need to be a corresponding US Dollar rally. So if you think this is going to happen, great. But charting a commodity that is trading purely as a Dollar and inflation hedge, as if it was a stock is not advisable or accurate. Your historical charts may show gold, but that is not the story. Gold dropped on the dollars huge rally when the financial markets imploded and money flooded into Dollar reserves. It had nothing to do with gold being over bought or anything.

reply to post by johnny2127


While I agree they share an extensive relationship, what about today when the dollar falls and GOLD drops another 2.x%?

But I agree when dollar gains gold should fall, but I do not nec. think this has to happen and I think you can apply TA to anything, we shall see I guess either way

Originally posted by GreenBicMan
reply to post by johnny2127

 

While I agree they share an extensive relationship, what about today when the dollar falls and GOLD drops another 2.x%?

But I agree when dollar gains gold should fall, but I do not nec. think this has to happen and I think you can apply TA to anything, we shall see I guess either way

Many times a correlating relationship diverts for a trading session or many. It is these divergences that many use as buying opportunities. Much how gold is now down .5% for the day and the dollar is up now. What you mention above was a short term thing that didn't even last the trading session.

In terms of technical analysis, yes it can be used for most things. However, with the way gold and the dollar have strongly coupled currently, if you really want to see direction of gold, run your TA on the US Dollar. This will give direction, although not the size of move in gold. This is more difficult to discern although there are methods.

reply to post by johnny2127


No doubt, I could have ran a chart of the US dollar and called it the other way. In fact I think OBE1 said this in an earlier post or something, could have missed it.

I guess my only point though is that I believe it is a short term top on a weekly scale which could take quite a while to fully develop. I dont think this will happen this week or even this month or next - but it will be interesting to see if this works - maybe it ends up being right but for the wrong reasons.

When I am not so drug'd up on my medication I am taking right now I am going to start a running chart of gold vs us dollar vs equities running and just keep it on this thread..

There is a lot of talk now about the dollar moving higher, which would mean to most equities falling, but I think that trade may be coming to an end (just an opinion on my part).

I think it will be interesting to watch this unfold, if someone else wants to put the work in to do this it would be appreciated. I have double vision right now basically haha.

Strong performance today with Gold managing a rally off the day's low 1135 to close near the HOD @ 1159. However I wouldn't be a buyer just yet. The relatively small drop in Comex open interest is an indication that we could still see further downside...but no more than -10% peak to trough , or 1080-1090 max in my opinion.

*

Gold:USD

More buyers than sellers: the ratio will rise - more sellers than buyers: the ratio will drop , but a decline in USD relative to other major currencies doesn't guarantee a rise in the price of Gold...any more than a rise in USD translates to an equal percentage drop in Gold.

Chart using proxy ETF's through March 09....

[atsimg]http://files.abovetopsecret.com/images/member/664ea4954b4e.png[/atsimg]

The Gold/Dollar inverse remains the backbone of Gold/Dollar ratio but it's not a constant , nor is it tick for tick on a % basis. We can see Gold and the dollar rise in unison when Gold is being bought more as a reflection of general fear , than as an inflation hedge. Conversely we can see both drop when more dollars are being sold in the FX than are flowing into Gold.

Identify breakdowns in the inverse relationship by scrolling this perf-chart...examples of sustained divergence: mid-January 09 thru mid-February 09 , and the 3mo period September 05 thru November 05....



Back in July 08 when the dollar was much weaker below 72 , Gold was only trading in the 950-960 range. Today the dollar is back above 75 , with Gold well over 1000. More than just an inflation hedge , Gold assumes it's role as the currency of choice in times of uncertainty.

And it's not only a dollar issue...Gold is rising in all the majors and in several 3rd world currencies alike.


[edit on 7-12-2009 by OBE1]

reply to post by cloudbreak

Originally posted by cloudbreak
reply to post by OBE1

 

Fractionals certainly will see alot of demand with any sizable drop, as it's fairly clear the uncertainty around the world is nowhere near behind us.

More on fractionals CB.

That sucking sound explained.

US Mint Runs Out Of Tenth-Ounce Gold Coin Inventory Day After Its Release For Broad Purchase

The sad state of affairs in gold land: the premium for the 1 ounce Gold Eagle coins has expanded from $59 to $99, Krugerrands are not available for sale in most places, and this most recent development just out of the US Mint: the one-tenth ounce American Eagle inventory at the mint has been depleted, almost instantaneously after the coin was made available for purchase. This occurred the day after the mint announced the release of fractional Eagle Gold Bullion Coins in one-half ounce, one-quarter ounce, and one-tenth ounce weights.

Full Text

Originally posted by GreenBicMan
I guess my only point though is that I believe it is a short term top on a weekly scale which could take quite a while to fully develop. I dont think this will happen this week or even this month or next....

Not gonna let you squirm-out GBM

It's clear to me that you developed this thread based on all of the "Gold bubble gonna pop" top calling we've been subjected to recently , especially last week.

Couple of snips...emphasis mine....

GOLD is due for about a 30% +/- CORRECTION, let me convince you in this thread

Originally posted by GreenBicMan
We know historically in the markets when something goes STRAIGHT UP or STRAIGHT DOWN that this is a preceding move to another violent move the OTHER WAY.

Such was a case in the market earlier this year, and I believe this is happening in GOLD right now.

In the coming weeks we will find out how strong gold really is.

Then as per your chart and initial summation , we should see a series of lower lows/lower highs from here. A 30% +/- correction punctuated by an occasional technical rally that never reaches the previous 1226 top...then an eventual bottoming and return of the senior uptrend.

Do I sense a shift in sentiment from "weeks"..to.."months"

Anybody can call for a correction at some undefined point in time...months into the future...but you said "I believe this is happening in GOLD right now".

Hey , fickle , misinformed newsletter writers call intermediate tops at every $100 gain...like the infamous broken clock , someday they'll be right , and you can bet the subscribers will be reminded of they're prescience for years to come...as all of their failed top-calls fade into a golden sunset.

reply to post by OBE1


Well soomething on a weekly scale takes WEEKS to develop. If you think I am changing my tune Im not, Im just calling it like I see it. Unless there is another point to your post I must have missed it, im not too quick lately haha

In composite , I believe you said Gold has hit big resistance here , topped-out , signaling a 30% +/- correction.

www.sierrachart.com...

Of course a break-out with follow-through above the previous high will negate an intermediate trend reversal. We'll need to see sustained lower highs/lower lows to confirm a multi-month correction of the magnitude you predict.

Don't count on Gold trading like it did prior to 1000 (previous corrections). The confirmed breakout above one thousand began a new chapter...technically we're in uncharted territory...literaly.

New paradigm.

Been watching Gold awhile now and I can't overemphasize the bullish implications of net central bank buying , institutional buying , and the elimination of market uncertainty over IMF sales.

Russia’s central bank eyes more gold
2009-12-07

MOSCOW (Commodity Online): Russia’s Central Bank picked up the pace of gold purchases in November, diversifying reserves as a weaker dollar boosts the appeal of bullion. And, it has announced that Russia may buy more gold in the coming days.

Full Text

reply to post by OBE1


Oh yes, above my top line it is busted. Its a theoretical short opp. from the top to the point where you could bring your trailing stop lower and lower if the formation continued like I thought.

If its busts, its all over. But I am thinking (like the last correction) it will take many weeks to develop. I think though this is still a good play bc you can easily define your risk (as I did in the first paragraph on this post)

EDIT:

By the way, I did not make this bc other poster are writing about gold bubble etc. If you read my original post I still think gold moves higher after this retracement.

[edit on 8-12-2009 by GreenBicMan]

Originally posted by GreenBicMan

By the way, I did not make this bc other poster are writing about gold bubble etc. If you read my original post I still think gold moves higher after this retracement.

It was your call of an intermediate top and 30% retracement that I was referring to.

Hope you feel better by the way

reply to post by OBE1


thanks - hopefully wont last too much longer - hope you never have a thyroid problem that brings up 1000+ other problems, although I do sleep for about 15+ hours a day haha so I got that going for me - that and overpriced doctors visits and prescriptions

Light sweet crude (CL) is something Ive been doing a lot of work on lately too (as far as making algorithms) if you haven't checked that out I would believe this to be the most "technically" driven contract in existence that I have found

reply to post by GreenBicMan


Hi GBM,
Gotta say that I can not see your 30% correction coming any time soon. I think the recent drop was more to do with phoney unemployment figures and a resulting stronger position in the dollar index.

The markets needed that news no matter whether the punters know it to be true or false, but the yellow stuff has bounced back as it is still well supported by strong demand.

Whilst I want to feel bullish about the dollar, I find it extremely difficult as the economy is doing nothing to support such feelings. I think that it is only a matter of time before another round of government bailouts appears from over the horizon and the printing presses are already being oiled as we speak.

For those who jump on the bandwagon that gold is in a bubble (and I am not suggesting for one minute that you are one of those), I think they have perhaps, never seen a real bubble chart.

Even looking at the 10 yr chart it does not appear to me to be a bubble, more like the second phaze of a 3 phaze bull run. I am always reading mixed and sometimes very conflicting articles on where gold is headed but when all is considered, it still appears to me that there is still quite a bit of strong upward momentum.

Of course there will always be fluctuations as economic news (strong or weak) is released but as long as production fails to keep up with demand and central banks and other institutes are willing to diversify their currency reserves, the short to medium term is looking good to me

PEACE,
RK

Edit to add a get well soon wish

[edit on 8-12-2009 by Rigel Kent]

reply to post by Rigel Kent


I do not think its a bubble either. Although anything is possible. I believe gold sold off bc of the dollar as well that day, but IMO for this rally to remain in tact on the WEEKLY scale it needs to come back quite a bit. This is actually a good thing, when stuff goes straight up it usually goes straight back down (see nasdaq 2001). and thanks - hopefully will be back functioning like a normal human soon enough haha

[edit on 8-12-2009 by GreenBicMan]

reply to post by OBE1


We are now at 50 (RSI) for GLD.

Same exact spot technically where it has rallied every other time.

Im guessing one more weak day and it will be the 50 Day MA, and if I am as excellent as I believe I am (lol) the 200 ma (97ish on gld) - that will take out my first price objective, but I believe more is in store, will be interesting to watch this unfold - on a side note my charting software doesnt allow me to constantly in real time get the continuous gold futures contract so I cant chart that like I thought without paying another 50 a month for GLOBEX quotes or something

[edit on 8-12-2009 by GreenBicMan]

Perfect bounce off Fib 50%....

[atsimg]http://files.abovetopsecret.com/images/member/a1950fec74f9.jpg[/atsimg]

38.2% should be interesting

reply to post by OBE1


38.2 is where we seperate the men from the boys haha

but seriously I think 50 right now is the make or break at least for the next month

[edit on 8-12-2009 by GreenBicMan]

reply to post by GreenBicMan

Twenty four day rally in GLD, and she takes half of it back in four. The market can be a cruel mistress , especially during auction week. Uncle doesn't like a level playing field , and he won't tolerate short-term $ seeking an actual ROI in Gold or general equities when he has several billions in ZIRP yielding treasuries to unload.

I think tomorrow it's the 10yr - 30yr on Thursday...then maybe we'll return to scheduled programming: stocks up..dollar down..Gold