Thursday, January 19, 2017

Gold Daily Chart; Overbot; Negative Divergence Developing

Keystone pointed out the bottom in gold last month with the green falling wedge, oversold conditions and positive divergence (green lines). The lower standard deviation band was violated and price was below the moving averages needing a mean reversion higher. A launch in price was expected which occurs. Now what?

Gold moves up to tag the middle band line, which is also the 20-day MA at 1167 and rising. Price kept on moving higher as the US dollar index has pulled back down. Gold now tags the upper standard deviation band so the middle band at 1167 and rising is in play.

The high prints in gold over the last couple days result in overbot stochastics and money flow. Also neggie d with the histo, stoch's and money flow which conspire to spank gold down yesterday and today. Gold is at 1203 as this message is typed (blue dot). This is the weakness due to the neggie d. The RSI and MACD line, however, are long and strong and want to see another higher high in price after this pull back finishes in the daily time frame. 

Gold is running into a congestion zone from November at 1220-1230. The daily chart will likely top out in this range in the days and say, week or two ahead. Looking at the gold weekly chart, there is upward momo and the 20-week MA resistance is at 1231. Price came up off the bottom and is in the neighborhood so it is reasonable to expect gold to tag the 1231 on the weekly basis.

Sprinkling some magic dust on the above thoughts, gold will likely recover after more sogginess today and perhaps tomorrow but then top out in the daily time frame say next week (when the RSI and MACD line go neggie d). Then a week or two of softness may occur but then price will likely head higher again and target that 1220-1240 area perhaps in mid or the back half of February.

The money was made on the bottom call and rally and if you enjoyed the ride it would have been smart to take the money. If you did not, cash out when gold likely comes up in this daily time frame in a couple days due to the long and strong MACD line. Going forward, the sideways choppiness may be a frustration for traders so Keystone will likely not trade gold but will keep an eye on it. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.