Thursday, December 06, 2007

Charts Of Interest



GLD has been in an uptrend and is now forming a symmetrical triangle...Watch for a breakout in either direction, but I would prefer to take a breakout to the upside not the downside.




Above is a chart of the XAU along with a proprietary indicator that I use. Notice how this indicator (red line) leads the XAU by about 2 months. Over the past year this indicator has been amazingly accurate in leading all the turning points in the XAU. If the accuracy of this indicator continues to perform as it did in the past, the XAU should now rally into mid January.



Above is another proprietary indicator that I use to forecast the U.S. Dollar. Notice how accurate this indicator (red line) has been over the past few years. If this leading indicator continues its accuracy, the dollar is in the process of establishing a significant bottom and should now rally into at least June of 2008!

***** CAUTION******
The above leading indicators can be very helpful but I caution all of you that other technical and fundamental tools should be used. Never trade based on just one piece of information. The above leading indicators can and do fall apart over time so stops and strict money management should be used at all times. Use common sense and always keep in mind that nobody knows what will happen in the future. NOBODY!

4 comments:

krhulak said...

Thanks for the intelligent and informative blog. I have a question about your indicators. If one of them indicates that gold will rise and another one indicates that the dollar will rise, they cannot be both right, can they?

Thanks

Kevin said...

Good question...I knew that was coming.. The dollar forecast is a LONG TERM forecast while gold is a SHORT TERM forecast. It is quite possible that gold will rally over the next 4 or 5 weeks while the dollar moves sideways or maybe gold will only have a small rally from now until mid January while the dollar begins moving up slowly. Anything can happen but just keep in mind that the dollar forecast is a long term forecast while gold is a short term forecast.

downtowntrader said...

There have been periods where the inverse relationship decouples. If you look as recently as 2001- early 2002 and part of 2005, there were periods where both rallied together. I am using the US Dollar index as my proxy for the dollar in both examples.

hkc_00 said...

Kevin:

Thank you as always. One unrelated question to this post, 2nd week is coming, most indexes are above or testing MA50, does your 2nd week BUY apply for this month? Thanks

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