Let us first start by me showing you the gold chart with the trend line on it so you can sorta see where we are standing at the moment with gold.
From the chart below you will notice the three red zones and the current yellow zone where we are residing in right now and lastly the gray area or what I would like to call it in my article, the moon rise.
Let’s start by going a little more into detail on some of those key points on the chart. (You can now zoom in and out and even place the chart on the right or left side of your screen and use the scroll-bar to scroll down with the chart remaining in view)
The moon rise and sundown or if you so prefer, the start of the downward sloping trend line, started at December the 2nd.
The first dawn and sunset or if you so prefer, the break above the downward sloping trend line could very well have started on February the 15th.
That makes this little gold day-night cycle last a whopping 75 days. Or rather one gold solar day takes 75 days while Earths solar day takes just 24 hours.
That is a long time to wait for a return to dawn. Goes to show you in some cases its better to invest in actual day-night cycles, at least then you know it will always take 24 hours before the cycle corrects and starts over again.
Oh well, probably wouldn’t be any fun left in that then, now would there?
In a way, I am like an ancient astronomer trying to figure out the cycles of the golden orb. In my scrolls I have already written down several other celestial bodies which I know to have an influence on the golden orb.
Still…there are times when I need to hastily write new chapters when a new sporadic event occurs that has an immediate impact on the golden orb.
I will include some scribbles from my last chapters :
Green cloudy mist appears, golden orb descends.
Red orb appears, golden orb rises!
Those are just two of the scribbles, I have a scroll full of them, some yet even unexplained to my fellow time-lings.
So, what are the thoughts of this ancient astronomer? Are we at the dawn of a new sunset?
Are we at first dawn?
The astronomer takes a closer look on the what he calls the celestial chart of candlesticks. He notices a clear and distinct single candle above the very same down ward trend line from the first chart.
Hm? Every other little candle before him didn’t manage to do that. All the way going back to moon rise! Not a single one!
But this one did? Is that enough proof for our ancient astronomer?
NOPE! Let us continue our quest, or rather from the astronomers point of view, his thirst for knowledge!
This brings us to the daily chart stretched out over a bigger time frame. Cause YES, I wasn’t a lazy astronomer and I uhm, 75 days was it,… kept notes for every…uhm…solar minute?
Anyway, on this daily chart you can see I’ve added two support zones. One at a $1000 and one at the level we bounced back up from, which is around $1050.
From the MACD :
We can clearly see the histogram appearing above the center line which is where we want it to be if we want to be long. The histogram basically shows us when a crossing occurs. So when the histogram goes below the center line we know that the blue line has crossed below the red line going down. When the histogram goes above the center line this indicates the blue line has crossed above the red line going up.
So, knowing that, looking at a declining histogram you will know you will have a declining blue line. Well, they are just the same really is what I wanted to explain.
It’s just the original EMA(12) line crossing up or down through the slower EMA(26) line but then shown as bars.
Remember, if you are trading by MACD…always, and I say always look at the weekly MACD before looking at a daily scale and before even thinking about making a trade cause if you don’t you could very well be going against an intermediate trend you would have no knowledge of otherwise if you had bothered to look. So yes, they are good indicators but never to use on their own.
The MACD performance on this chart is clearly making up for its lack of performance from once.
We are still below the center line so still in the grip of Dr.Down but we are clearly not the hospital’s favorite patient cause this one just won’t stay down! A hospital thinking about getting rich from a patient like this would probably be well advised to stack up on restraining equipment, extra personnel, a way to quarantine or seal of parts of the hospital in a secure manner but most importantly, a safety area with a bare minimum of 30 inch thick strengthened concrete walls just in case things really go awry.
Every insurance a hospital closes probably has that in their fine print included so that is why most hospitals mostly won’t even bother with for one…investing in the safety requirements…or two…being stupid enough to try to contain a patient like that. There are insurance cases on record where for instance a self-absorbed and overzealous hospital director even saw the entire roof fly off with the midday tea. Mind you, those were the lucky cases, most hadn’t even a hospital left standing let alone the ground it was in.
So, most don’t bother anymore.
So, this means in my opinion then and this time explained to you in a very boring way. Yes, I think MACD looks good to go up.
From the ADX :
Now, this is interesting. A look on the ADX chart shows us we are again nearing a crossroads. -DI has come all the way down from its high thirties and +DI has found its way back up towards the meeting point which is around 25. +DI could therefore very well be overtaking -DI in a not all too distant future. Meaning the force of upward force is indeed increasing. From that point on I would like to see the ADX line steadily increasing. The ADX follows the actions of the -DI and +DI. Since August 2009 we have had a very strong increase in the price of gold and the ADX line has correspondingly gone up to 40 and beyond. Only this correction now which started December the 2nd made the ADX turn back down. Now it is below 20 which means we have a trend which is considered weak.
Makes sense since we have been on a prolonged down since early December and have only just started to see some signs of reversal.
So, very hopeful indeed.
RSI or Relative Strength Index :
Since early December we have retreated from being over 70 and overbought almost back to oversold. Right now where are at the 50 line so really in neutral zone. Plenty of room to go up and the same goes for down.
The bounce that took place on February the 5th also seems to coincide with the 38.2% Fibonacci retracement level when you take a full retracement from the start of the rise till the high of 1226.
Weekly, hm, not very interesting. Trend is still unchanged and still upwards as far as I’m concerned. The weekly confirms the daily.
MACD was a bit on the decline but as you can see that has already subsided.
On the ADX, the +DI is still the clear leader.
Weekly only gets interesting if $1050 breaks. Until that happens UP is where I would look.
Leaves me but one last thing. Keep those support levels under tight watch and place stops accordingly so there will be no surprises.
YeOldGoldNugget’s links of interest
This short video shows two important elements that are in play right now and how they could determine the next big trend in gold.
The video is free to watch and there are no registration requirements. I hope you enjoy the video and make a comment on the blog about how you feel about this market.
Every trader and investor I know would love to buy at the bottom and sell at the top. The reality is that this is not a winning solution, nor is it possible to do this on a consistent basis.
What MarketClub looks for is to catch the sweet spot of the trend. The sweet spot is the 70% to 80% that’s in the middle of a trend.
In this short video, we look at crude oil and how you can spot the big trends using MarketClub’s “Trade Triangle” technology. I think you’ll find the video informative, educational, and it will give you an insight into how we look at the markets.