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.

More evidence of de Guzman’s existence? Well not really but more rumors abound — maybe that will suffice. Gold seems to be on a downer – again. For the short term trader I’m not sure if this up and down is doing them any good. They have been of such short duration that one must be pretty nimble and accurate to make money.

GOLD

With only two days of trading gold has been down on both. Maybe it’s time for a day or two of upside. Gold is sitting almost on top of a short term support, which would give it extra credence for a move up. However, that intermediate term support at the Feb low is looming closer and closer.

My short term P&F chart continues to drift lower. With a present down side projection of $400 one might say that at least a move to the intermediate term support (shown in the previous week-end review) is very probable. As for the $400, well that would require breaking the intermediate term support and have further grave implications so I’ll just go with the support at this time.

Looking at the chart today, I have drawn that short term Merv’s FAN Principle trend lines again. Note how, once the trading moved back inside the second and third trend line zone it has stayed within the zone since. Although there is much room to move lower the odds are still that the most probable direction would be a breaking of that third trend line (again) on the up side. When that will happen is presently ??

Also noted on the chart are both the short term moving average line (15 DMAw) and my short term price momentum indicator (13 Day RSI). Both are still projecting a negative trend in motion. Gold is once more below the moving average line and although the line almost turned up a few days back, it has remained negative. The momentum indicator is showing some strengthening in the recent price activity by not getting further negative as the price dropped lower. It is not yet at the point of signaling a positive divergence but is close to such signal. Volume, a long time negative, has been strengthening over the past week and is now one of the strongest positives of the indicators. However, by itself, it does not rate a trend reversal signal. One would use such strength as a warning of a possible reversal and watch the other indicators more closely for confirmation. So, still bearish on the short term but starting to be extra vigilant.

As for the Stochastic Oscillator, it had crossed into its positive zone last week but is now turning down and has crossed its trigger line to the down side, but still within the positive zone. A positive move in gold on Wednesday would reverse this while a negative move in gold would most probably place this indicator back inside its negative zone

U. S. DOLLAR INDEX

Up, up and away. There seems to be no stopping the US$ Index these days. Is it the Euro or the economy or what? Who REALLY knows? Just go with the trend and don’t worry until the trend changes. Although all indicators are positive for all investment time periods this will not last. Sooner or later the Index will have to take a decent breather or short term reversal. The action on Tuesday seems to suggest that the recent trend has been too far too fast and a hesitation may be very close.

METALS and ENERGY

As space fillers I have shown two commodity charts, one a short term P&F of silver and the other a daily Candlestick chart of Texas Light Sweet Crude oil.

The Silver chart shows the recent upside break above two previous highs and a down trend line to validate. The projection is presently to the $9.30 level but there is still a strong resistance to be overcome. I would be more comfortable with that projection once the resistance is overcome with a move to the $7.70 level.

As for Oil, It has broken above its down trending channel and appears to be on its way to its previous $58 high. There is nothing in the indicators at this time to suggest it will not get there, and soon.

GOLD INDICES

As for the various North American Gold Indices, they are on a real upside tear at the present time but have been so down that it will still take a little more upside action to change their primary bearish directions. What is encouraging for gold trend is that the Indices seem to be stronger than the gold action itself. Gold usually FOLLOWS the actions of the major Indices so we will have to watch if the Indices continue to act stronger than gold, for a gold recovery.

See you on Monday for the full week-end review.

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.