Monday, September 24, 2007

The Bull Flag in the Monthly XAU Chart

The previous post discussed some significant breakouts in the Euro charts, and the post before that showed some major developments in the US Dollar chart. All of this was meant to be indirect bullish evidence in favour of gold and gold stocks. In this post, let's have a look at gold stocks directly.

In order to understand the upcoming chart, I would urge you to read the following two articles:
These articles go over why the long-term gold stocks chart looks so bullish, and the reasoning behind this bullishness. Here is an updated version of the chart mentioned in those articles:



If you do not have time to read the aforementioned articles, here is a summary:

First, a bull flag has formed. Traditional technical analysis suggests that once prices breakout out of the flag, the subsequent rally should be approximately equal the height of the flag pole, which would take the XAU to the 210 area or more, in this case. The XAU has just broken out of the flag.

Second, the bollinger band width has just triggered a buy signal. It has touched the "launch pad" and bounced off. This is another long-term buy signal. You can see for yourself that whenever the bollinger band width reaches the launch pad level, a huge price movement follows.

Third, the indicator at the top, which is not stochastics, but based on volatility, has given a buy signal by crossing over 20.

Finally, the XAU is approaching levels not seen in the history of the index's existence. This can be viewed as a giant bullish triple top breakout. All in all, this all equates to a tremendously bullish situation for gold stocks. This does not necessarily mean that gold stocks will rise tomorrow, but it does mean that they will likely be much higher in the weeks ahead.

2 comments:

RedGoldCU said...

This is a --totally unsolicited-- pitch for Danny Merkel, and all of his hard work on this website/blog. Danny in my humble opinion, deserves at least a token sign of our appreciation.

I have been reading his posts on this website on precious metals, currencies, the dollar, etc, etc, for several weeks now. They are "spot on" accurate and informative.

I am -very- impressed with the quality, quantity, and most importantly the accurate content of all of Danny's postings.

For better than the last twenty years, I have made my living trading securities, stocks, and mutual funds. I have seen many "prophets" come and go over the years.

There could not be a -more important time- than right now, to appreciate and profit from Mr. Merkel's hard work.

I humbly ask that you send Mr. Merkel a small sign of your appreciation in the form of a small donation. Danny has a link here on the website to "make a donation." He certainly deserves it after all of his excellent articles.

I personally just tonight sent him through PayPal a very small -THANK YOU- donation of just $10.00.

If all of you that are "regulars" here, and appreciate his hard work, (in addition to Danny having a full time day job) would just say --"Thank You Danny"-- and send him even $2.00, it would all add up!

How about it folks? Two dollars?

We need to show Danny that we truly -do- appreciate all his hard work.

(For the record, I have never met, nor spoken with Mr. Merkel, other than with a few emails about the quality of his postings. We have never discussed what I am now posting, about making a small donation.

THANKS VERY MUCH! Please donate a couple dollars to simply say: "Thanks Danny!" (:

All the Best,
RedGoldCU
Steve B.

Danny Merkel said...

Hi Steve,

I very much appreciate your comments and the donation. You are right, it does take a lot of work to research and write articles, but as long people can understand and appreciate the analysis, it is worth it for me.

You also said, "there could not be a -more important time- than right now, to appreciate and profit from Mr. Merkel's hard work"

That is absolutely 100% correct. Which means that rather than sending donations, why not go out to a coin store, and buy some silver coins for yourself, or a friend. You can also order a free precious metals kit from a link that is usually on my site, and read it or give it to a friend.

Steve knows as well as I that gold and silver (and copper) are the places to be invested.

Thanks again Steve.