The analysis presented is the view of a pure market technician. There is no attempt to present any fundamental data or information as that is not the expertise of the analyst.

The mid-week review lets us see if the actions foreseen during the week-end are performing as expected or if we need some refining or revision to the analysis. Unless there has been some significant change in the intermediate or long term prognosis this mid-week review will basically concentrate on the short term market action. The rest shall be covered during the week-end review.

GOLD

A wise man many years ago said that the markets do what they need to do to frustrate the greatest number of investors most of the time, or something like that. Gold is frustrating investors, that’s for sure. OR at least it is frustrating this analyst. I’m glad I kept my options open as to the gold direction in the week-end review. I would have bet that the direction would be to the down side but due to the developed support and resistance levels, I could only wait for a break one way or the other. It broke on the up side. Before taking a look at the short term activity a few brief words about the other time periods.

Gold is once more above its long term positively sloping moving average line with a price momentum that is also positive and pointing higher. Volume is still the only sore spot. Although the volume indicator is positive the daily action, more relevant for the shorter periods, is not very strong. With a continuing bullish point and figure chart, on the long term I am still bullish.

Gold is once more above a positively sloping intermediate term moving average line, it started turning up on the Wednesday action. Momentum indicators, moving up and down through their neutral lines, are once more positive and moving higher. My volume indicator is positive but very weak (see short term comment). The P&F chart is technically bearish but a case can be made that the signal was false. I’ll maintain the bearish reading but overall am reversing my intermediate term rating back to a bullish rating.

Now for that short term. The short term P&F chart has broken above 2 previous highs, which is normally a very positive sign. However, my P&F technique also requires the move to break above the down trend line and unfortunately, as the chart shows, the short term down trend line has not yet been penetrated. That would come on a move to the $438 level. As for the normal indicators, the recent action has broken through that $432.40 resistance level. Gold is also comfortably above its short term positively sloping moving average line. Two of my price momentum indicators are in their positive zones and heading higher. Only the MACD has not yet moved above its neutral line but is very close and moving higher fast. As for volume, my volume indicator is positive but the daily action is underwhelming. Volume perked up just a little on the Tuesday move but unfortunately I have no data for Wednesday’s move. The futures industry still seems to be working with the technology of the ‘50s. How else to explain the fact that they cannot provide us with the daily volume data shortly after the market close as the Exchanges do with stocks. Providing such data the next day was what they were doing back in the 1950’s. Despite the concern with the volume action I have gone bullish on the short term. Of course, this is the time period where changes could occur on very short notice so let’s see how the bullish rating holds up towards the week-end.

U.S. DOLLAR INDEX

Well, with gold moving higher it almost goes without saying that the US$ Index has moved lower. My bearish long term rating remains unchanged (see the P&F chart) while my intermediate term rating going back into the bearish rating. On the short term, with a move below that support and up trend line on Monday, and decisively so on Tuesday I have reverted back to the bearish side. A more detailed analysis will be forthcoming in the week-end review.

GOLD INDICES

Major North American Gold Indices had a nice 2 day rally and then halted on Wednesday. This may portent ill for the Indices and the price of gold. Very often the stocks lead the price of gold and this may be forecasting a halt to the gold rally. We’ll have to wait and see.

Merv Burak, CMT
[email protected]

During the day, Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the Earth, Merv dons his other hat as a Chartered Market Technician (CMT) and tries to decipher what’s going on in the securities markets. As an underground surveyor in the gold mines of Canada’s Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual, Merv’s driving focus is to KEEP IT SIMPLE.