Tuesday, September 11, 2007

Euro and Gold Point and Figure Analysis

Today, gold stocks continued higher, after taking a breather over the last two days. At the same time, Gold Bullion also continued its ascent, adding on another 9 dollars.

I don't normally show Point and Figure charts, but I will in this post since there have been some interesting developments in these charts in last few days. Like all my other charts, these charts are from StockCharts.com.

If you'd like to find out more about this charting method, I would recommend reading this book. Anyway, the following chart is of Gold Bullion. It goes back to about February 2007, and it has a 3 box reversal. The main point of interest in this chart is the quadruple top that gold has just broken through, which is a very bullish pattern.

Because gold tends to move in the same direction as the Euro, the Euro's point and figure chart is currently exhibiting a similar development. However, as shown below, it has not yet broken through the overhead level of resistance. Once the Euro busts through this level, it will likely add more fuel to the fire for gold and gold stocks:

If you find these type of charts useful, then you may also enjoy this blog. And on the topic of currencies, the USD has, at long last, broken the 80 level. At this point this has not led to a spectacular washout in the currency, but I feel that it easily could.

Although it's impossible to tell for sure, there could could be a large number of stops, holding billions of dollars, sitting just below current levels. Thanks for stopping by.


HeadlineCharts said...

Hi Danny,
Seems like stocks and commodities have all moved higher, and the US Dollar has moved to new lows... all in anticipation of the Fed rate cut... and its making me nervous so I went to cash again. I'm afraid the news is built in to prices, and it is September when we often get unpleasant surprises. Any thoughts?

Danny Merkel said...

Hello again,

Always a pleasure to read your comments.

I think what you said is in fact happening. The market is discounting what will happen on September 18th.

However, I still believe that this rally may have quite a bit of steam left.

Just out of curiosity, do you ever look at the commitment of traders reports? It's something I look at, and this data is painting a very bullish picture for me.

Finally, the fact that 80 is broken is a huge milestone for me. But it's hard to say for sure, since the Fed's decision is the wild card. The market is discounting it, but I don't think the market knows exactly what is going to happen on that day.

The Word said...
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