Gold's relentless rise

Gold is up 69% from the Oct 2008 Lows around $680 and already 11% above it's previous $1033 top. While the trend has the momentum and the fundamental underpinning to proceed I would like to look for contrarian signals.

Just to asses the present moment we have a RSI reading high like in Nov '08 and March '09 - that saw corrections. The Trend strength measured by the Wilder's ADX is reaching the 25 threshold thus signalling the solid momentum of the movement.

As Welles Wilder had written there is a good sign for going against the prevailing trend when the ADX rises above both the +DI & -DI. The timing and the money management is critical to the success of taking such signal as we can see such a setup occurred in Jan '08 but it wasn't until the end of March '08 that the intermediate high at 1033 was reached and the correction ensued.

Pattern-wise I drew a tentative Rising Wedge wich projects a Resistance around $1175-80 level.

The stock indices become weaker and while the might be some Christmas window dressing I see the exponentially rising of the Gold Trend as a precursor of the next bout of stock indices fall.

S&P500 shows signs of exhaustion

The 7 month run of the S&P is exhausted and the momentum is already missing.

RSI and Slow Stochastics are both suggesting that a pullback is imminent - the question remaining is if it would be a short term, intermediate or a long term top?

While I'm far away from the perma-bear state of mind - there is a great chance that the illusion of the end of the "greatest recession" since "The Great Depression" was just cheap liquidity pumped into the system to lift the asset valuations. However Debt ratios remain extremely high and job market is still very weak - that means that consumption and private investments will be scarce and the economic growth can't go on on government spending only - not to mention the gigantic US debt issued in the the last 2 years.

Purely technical picture would suggest we are inside the primary trend channel (red), however the Momentum is already slowing and the price is making only marginally higher highs/ higher lows. The Sideways range channel in the last 2 months confined the advance of the move.

Last weeks advance has been followed by the indecision pattern of 2 consecutive Doji candlestick days. 1100 level is psychological Support and below we go for the 50-Day MA that held all previous corrections. However I doubt this time we will have much support there as I see a fast move towards 1025-50 area where initially the trendline support will pause the price decline.

EUR/USD - Possible Irregular H&S pattern in progress

EUR/USD Daily chart is possibly developing an Irregular Head & Shoulders pattern.

Following the lower top at 1.5044 we had a big down day along with the Key Reversal in AUD/USD, corrections from recent tops in Stocks & Commodities.

Technically the smooth Primary Uptrend Channel since June '09 is intact (black lines) and it determines the larger timeframe trading bands: Lower 1.4560 - Higher 1.5220.

On the Short term pattern that is developing inside the Primary trend channel I'm looking for a test of the Neckline around 1.4680. That level is probably to offer good sized bids but if broken it threatens the structure of the underlying Primary trend Channel.

USD Index (NYBOT:DX) - Double bottom? (part 2)

Two days ago the brief breach below 75 level resembled a breakout attempt. I've expressed an opinion that we might actually have a Short-Term Double Bottom pattern forming in progress.

Seems it is not that easy to have a sustained breakout and to my observations lately we more often witness violent whipsaws following the fake breaks. No need to mention the Pound Sterling as one of the most violent ones.

Anyway, I am kinda happy and intellectually satisfied by realizing the potential reversal. I continue to monitor the developments as the USD down trend has been quite orderly maintained since June however with the Volatility being really low in the mast few months it is highly possible that we could see some bigger moves in the very near future following the Double Bottom bounce.

USD Index (NYBOT:DX) - Double bottom?

There is widespread media speculation going on with the state of the USD as a reserve currency.

From IMF officials stating it's still overvalued to smart speculators looking for a bounce on the notion of the overstretched USD sellers' Open Interest in the CME futures positions.

Here is a purely technical picture: there is potential for a Double Bottom IF the 74.80 level holds - it's where last month we had a bounce. However the trend channel (green lines) is still down and intact after the Resistance trend line held the spike to he 50-Day MA.

The Volatility measured by the ATR has been very low since August '09 - and that implies trend continuation. Fundamentally while there was so much negative talk about the economic recovery we have seen all major indices and commodities relentlessly rise. That means we must go with the flow until we have a signal or proof of turning point.

Crude Oil - Bull Flag Consolidation - possible target $95

Crude Oil among all commodities has a star status for its high volatility.

I observe the chart pattern that looks to me at present as a Bull Flag consolidation range. If we measure the previous leg from the $65 low to nearly $85 high we have a target step of 20 bucks.

Now if take the consolidation low around $75 - if I breakout around $83-84 materializes in next 2 days we have a target around $95 and most probably the psychological $100 level.

This upward trend is still contained within the big channel and price is currently holding above the pivotal 21-Day MA.

While Volatility measured here by the ATR (2.57 now) has been relatively low recently in my view it is trending higher and once $83 is broken we might see a strong rise in momentum that is usually accompanying a breakout move.

Gold is leading & Silver following

There is a market talk on the decoupling in USD and Commodities trends. I'd like to make an inquiry in this field. Here are the Weekly trends in Silver and Gold.

My first observation is that Gold is in solid breakout mode and Silver is following a bit shy. I have read some time ago that analysts prognosticated a bigger rally in Silver actually for a number of fundamental reasons like decline in production capacity, industrial demand and so on. Well technically it obviously lacks the conviction that Gold is manifesting. Here is a detailed view:

Gold closed at an All-time high the week before US Senate is voting for the Health-care plan. A sign of inflation scare coming from the rise in government expenditures and DEBT?

Technically its 5-th straight week above 2008 high ($1033). Trendline Support is working perfectly and the Resistance projection is giving notional target around $1160. We have a rising 50-Week MA and RSI trending higher above 70 line. ADX reading is rising to 20.91 - not far from the critical 25 level of sustainable Trend Strength.

Silver - at the same time is still caught in the 16 - 18 range. It has solid Resistance to overcome - the 2008 tops ($19.50 and $21.40). The case for uptrend continuation is supported by the 50 / 200-Week MA Golden Cross and the rising RSI while ADX trend indication is not as bullish as we can witness in Gold at the same time.

Lastly while Gold's last week is a bold breakout move - Silver's last week candle is a typical Harami or Inside Week pattern which calls for indecision. As great traders say buy the strongest performers - which in the case means that we can see a hard evidence of solid momentum in Gold but same lacks in Silver.