The chart below was posted on 8/23, due to Gold hitting a long standing upside target at $1,900 (see post here). The theme of the first chart below was… if you see the left side of an Eiffel tower pattern, often times you end up seeing the right side too!
Is the Eiffel tower pattern proven at this time? NO! Moving in that direction? I will let you be the judge of that! (Gold stood at $1,888 at the time of the post).
Last weeks quiz reflected that an asset looked to have created a “Double Top” which presented two opportunities…Harvest at the highs and if aggressive, look to score on defensive by going short at this unique opportunity. (See last weeks quiz answer here)
CLICK ON CHART TO ENLARGE
Below is a dual chart of GLD and SLV with On Balance Volume (OBV) overlays…
CLICK ON CHART TO ENLARGE
GLD and SLV have experienced very sharp rallies from late June to mid August. In the past few days, the rising support lines and OBV lines created from those rallie, are breaking to the downside! The quiz last week reflected that a “lower than normal risk situation was at hand” to short Gold/Silver. The breaks of these support lines should help increase the potential that GLL and ZSL have some more upside.
Patrick….EXCELLENT observation, Love it!!! RIMM feeling some of that pattern too?
The Eiffel Tower is the perfect parabolic symbol! NFLX is currently enjoying it.
There are more news to the story.
Please look at at a monthly chart of gold futures GCU11. It broke Bollinger bands with 2.75 width. It is a sufficiently seldom event and in a past ended up with a correction as far as my tool can see. First support line is a 9 months EMA (best approximation to the trend) at 1590, second is a 40 months EMA at 1228 currently. So, we may expect 9 months EMA in 1600+ range when it meets the falling price line. It is too early to project second support, but it happened in the past that this line served as a support.
Ty…I understand the fundamental training. Sir John Templeton, was my mentor and hero. Talking about a great fundamental/value analysis guru! In my opinion, second to none!
The thing that got me was this… over 20 years ago he said other than the bible, there was one book he had learned the most from per helping him with investments. He felt so strong about the book he made every portfolio manager of his read the book. He said I must read it too and I couldn’t wait to get my hands on this material! The ironic thing, what was the book about? Human behavior! The book was the “Extraordinary popular delusions and the madness of crowds” by Charles McKay.
He said to me at the time, even though the book is 150 years old, it deals with fear and greed, which applies now and will 100 years from now. This is one of the reasons I like the “Power of the Patttern” so much, since it reflects repeating patterns created by Fear and Greed.
With the Power of the Pattern (POP) we can enlarge portfolios and let the “True but useless info” fall to the side.
I still have much to learn about the “power of the pattern.” Being trained as a qualitative-macro-fundamental person I have a very hard time getting a gut feel and/or intuition for quantitative-micro-techinical data. I am very new at chart pattern analysis…being a macro/longer term trend guy who is stubborn in a TB useless sense…I lost my behind twice (70%) being overly bearish just before QE2 and in April 2009 (That is why I visit your blog every day).
I guess I just have a difficult time giving up my gut instincts and going with what a chart pattern might suggest. I understand the TBU and TBU battle!”)
I never had a gut fell for “e” or “pi” but it seems like FIB levels are just as magical…and important.
Thanks for all you do for us…
Ty… The 10-year rising channel for Gold remains in place, with the $1,500 level as the bottom of the rising channel. I am not a bear on Gold or Silver. I have just found when any product hits a 5/10 year channel resistance and a 30-year fib resistance number, I at least want to protect my gains, via harvesting or hedging. Other times not only do I want to harvest, when conditions are ripe for a decline, I want to short and attempt to score on defense.
So many bears say that Gold is in a bubble…I haven’t said that once and won’t. All I know is that so far EVERY TIME Gold has hit the top of the rising channel it backed off at least 20% in value. Even though gold remains in a rising channel, I don’t really care to give up 20% of the value of my holdings, before an uptrend continues.
I share the quiz’s in an attempt for people to see a product for the pattern at hand, NOT what the product is. Last week I shared a quiz that reflected what looked like a double top, up against a long-term resistance line. This concept has treated my family and investors well for a couple of decades.
Investors face a TBU vs- TBU battle! ( True but “USELESS” info vs- True but “Useful” info)! Investors let too much garbage get into thier head, which throws of the reality of price. We buy and sell price, why not focus on price, versus all the noise the world throws at them!
Thanks to you and everyone for your quality comments and viewership of my efforts.
Thanks for sharing this chart and for your earlier thoughts on GE2. Well based on my 5 year pencil/paper:) spot silver chart, I am hoping $39.00 an ounce spot silver holds (estimate $37.?? SLV) support as silver sells off a bit.
I was thinking…gold had its parabolic run up then crash then it ran back up…silver had a much earlier parabolic run up then crashed…and never reached its high again…so…buy buy buy at the long term lower trend line.
Another thing I was thinking…this calm over the Greece issue is temporary and now no one can run to the Swiss Franc as an alternate currency…so if people get scared…Gold Silver…or the less bad fiat USD are the only alternatives…but if spot silver breaks below $39.00 and closes…sell sell sell…