Friday, September 7, 2007

Gold and Dollar Update

As you probably know, gold and gold stocks went ballistic yesterday. The HUI Gold Bugs Index was up by 6.61%, and Gold Bullion increased by about 13 dollars. Today, however, was not as promising. The gold bullion ETF, GLD formed a bit of a shooting star on the daily chart:



In addition, the entire candle is outside the upper bollinger band, and the RSI is getting uncomfortably overbought.

Notice that the high for the day was 70.00, which is round number resistance. But let's not just rely on technical indicators. Let's look at the intermarket picture.

The US Dollar is, once again, at the 80 level. This has proven to be strong support in the past. I exited my gold positions today, and will only re-enter if the 80 level is broken. It will be interesting to see what will happen on Monday.

4 comments:

STOCK SNIFFER said...

Good call in my opinion. Gold stocks overbought and at risk to broad market correction. If $HUI breaks 370 you can find another entry. You have a wonderful site. Please persist--I know you want a wider audience--keep up the great work and people will eventually flock to your site.

HeadlineCharts said...

Hi,
Another good chart. I often forget to look at the bollinger band and should use it more. Surprised that you sold your shares though. This break above the upper band looks so bullish to me despite the spinning top. I can see gold stocks pausing for a few days but that might mean moving sideways. The precious metals bullish percent just turned up on Thursday and is at 30% which is very good field position. The bollinger on the monthly charts looks excellent.

Danny Merkel said...

stock sniffer,

Thanks for the comment. I agree with your thoughts. The 370 level will be the next resistance level. By the way, I like the latest P&F chart on your site.


headlinecharts,

You certainly could be right. I really do respect your opinion, and there is a strong possibilty of what you said happening.

To me, it all depends on whether the USD breaks the 80 level. If it starts forming a triple bottom, it will put a cap on gold's upward potenital.

And in terms of bullish percent, I didn't even know there was one for precious metals. I know there's one for energy and the TSX, but I could never find one for gold or silver. Could you, or anybody else, tell me the ticker? Thanks.

HeadlineCharts said...

Hi, stockcharts.com has limited bullish percents. But you can track gold stocks by creating a list from the gdx index and just count the P&F signals using candleglance. Or you can run a P&F scan on the list. There are also a number of other services that provide bullish percents.

Have you looked at the monthly XAU using the bollinger bands. Check it out because it looks like a major break is ready one direction or the other. Also, I noticed a lot of the gold small caps have very nice consolidation patterns.