Gold Stocks Should Move Higher
Above is a six year chart of the $XAU which is the gold stocks index. As you can see gold stocks have been in an uptrend for the past six years so buying a pullback in the direction of the trend is something that always interests me.
In the lower panel is a simple oscillator known as stochastics. There is no magic to this oscillator and trading this oscillator by itself can actually be hazardous to your wealth, but when combined with other tools such as the trend, support/resistance, cycles etc.. the stochastics can be very helpful for timing purposes.
Notice for the past 6 years every time the stochastics moved towards the buy line and turned up, gold stocks had significant rallies. At the very least, the XAU would rally to test the last intermediate swing high. If history repeats like it has for the past 6 years, XAU should test the 170 high. Also notice the band of support the $XAU index held on this last pullback. So basically I'm anticipating a rally for gold stocks over the next few months..We'll see how things unfold.
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4 comments:
K-
I've seen you use Slow STOs instead of Fast STO, is there a real difference?
Also, do you prefer using weekly charts or daily ones? Or it depends from case to case.
Thanks.
How are you Yaser?
I always use slow stochs because they are smoother...Fast stochs are very choppy looking.
I use whatever timeframe has a trade setting up on it. I start with the monthly for a macro view, then move down to the weekly and then finally the daily. If I see a pattern on one of those time frames, than thats the chart I will do my analysis on.
Kevin, what's your opinion on 10-year T bills?
Btw, about daily-weekly charts. I'm a beginner, so my opinion is not important, but I strongly prefer 5-day moving average over current chart. It erases a lot of noise I can't interpret anyway.
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