This is the daily chart of gold futures, continuous contract. Back in July, we marked out the big pennant on the weekly chart.
Using the standard Edwards and Magee measurement formula, the pennant measures approximately $65.30. Add that to the point of breakout at approximately $367.10, we arrive at a projected upside target for the weekly chart of $432.40. The high for February Comex gold so far is $431.50, so we have to say that the upside target has been hit.
This is the daily chart of the AMEX Goldbugs index. When I traded gold for a living, the prevailing wisdom was that gold stocks should lead the metal. In this case, there is a glaring divergence in the price action between the metal and the stocks.
The volume that is shown in this chart belongs to Newmont Gold, a big unhedged producer. In today's action, we saw heavy volume as NEM retreated while the $HUI does a big huge test of top.
If we look closely at the daily chart of February Comex Gold, Monday and Tuesday featured a price range of nearly $10 per day, and formed a harami pattern.
While this may not be The End of the move, it is certainly entering the territory where it is gyrating wildly. Add this to the divergence observed between POG and the indices, plus the fact that they are in a Test of Top formation on the daily and weekly charts, this is certainly a critical juncture after a multi-year rally.
04.01.07 16:17 #