Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Will the Gold Rally Last?

Commodities / Gold and Silver 2011 Jan 09, 2011 - 10:31 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleIt seems that gold puts on a rally of sorts at the end of the year.  The big question always is “will it last?”  It seems that this year it may not last but the action is still not all that bearish so there is hope that the down side will be short.


We can dispense with the long term P&F chart real quick.  Nothing has changed in the past few weeks as far as the chart message is concerned.  Although the present direction of the chart is downward the trend is still bullish and would need a move to the $1320 level to give us a long term reversal signal (although $1305 would be a stronger signal).

As for the normal long term indicators, gold remains comfortably above its positive sloping long term moving average line.  The long term momentum indicator remains in its positive zone but is moving lower and has now moved below its negative sloping trigger line.  As for the volume indicator, it has just dropped below its long term trigger line but the trigger remains in an upward slope.  For those who love trend lines the volume indicator has also just dropped below a one year old up trend line.  From a long term perspective gold price has been moving inside an up trending channel that is over two years old.  The latest gold price is about at the mid point of the channel so it has some distance before it breaches either the upper resistance or the lower support trend lines.  On the support side the up trend line is at about the $1275 level which is considerably below the P&F reversal level noted above.  Anyway, putting these indicators all together the long term rating remains BULLISH.


The gold chart today shows the past year and a bit of daily historical trading activity.  The three basic time period moving averages are there along with my intermediate term momentum indicator.  What we see here is the extension of the long term channel mentioned in the previous section along with an intermediate term channel that has trapped the past few months of action.  The gold price on Friday seems to have just about touched the lower support trend line of the smaller channel and then bounced.  We now need to see to what extent this bounce will continue to the up side or will revert back to the down side and breach this smaller channel.  With the New Year the daily volume has once more started to improve, however, it’s just too bad that the price trend has been to the down side during this volume improvement. 

Looking at the normal indicators gold has now moved below its intermediate term moving average line and the line slope has just turned very, very slightly negative.  The intermediate term momentum indicator remains in its positive zone but has moved below its trigger line and the trigger has turned to the down side.  As for the volume indicator, it has crossed below its intermediate term trigger line and the trigger has turned downward.  Putting it all together the intermediate term rating has now dropped to the BEARISH side.  The short term moving average line remains above the intermediate term line for a non-confirmation of the bear.


I usually show a short term chart of the gold action but this week the intermediate term one (above) will do.  Since early October the momentum indicator (both short and intermediate term) has been showing a consistent lower peaks while the price of gold has been making higher peaks.  Gold finally made a lower peak during the first trading day of the New Year and the trend has been lower since.  With consistently lower lows the momentum indicator has been showing weakness in the gold price activity for a few months now.  There is also a case to be made that we have a potential head and shoulder top pattern with a convoluted double shoulder on the left side but I don’t like to get too convoluted in my analysis and prefer to keep it simple so I’ll just go with the slight up trending channel as the pattern here.

Gold closed below its short term moving average line during the Tuesday plunge, pulling the line down with it.  It has been trading below the moving average since and the moving average has continued in its negative direction.  The short term momentum indicator is in its negative zone and below its negative sloping trigger line.  The daily volume activity has been quite improved over the holiday volume but this is during negative price days and not helping.  For now the short term rating remains BEARISH.  The very short term moving average line (not shown this week) has now crossed below the short term line confirming this bear.

As for the immediate direction of least resistance, that’s a tricky one.  Everything looks negative but Friday’s action seems like it could be the start of a positive bounce.  The Stochastic Oscillator is still in its oversold zone but has turned around and could break above its oversold line on another day’s action.  I’m inclined to see a positive move at the beginning of the week but will go with a lateral move for Monday.


Them that moves up the highest can drop the furthest, so it is with silver, versus gold. Silver dropped a whopping 7.3% this past week while gold dropped just half of that.  Still, over the three basic investment time periods silver remains the top performer.  

Depending upon the time period P&F chart one uses we do have a solid support at the $28.50 level, where the price is at the present.  The intermediate term moving average line is at about the same level so we should see silver remain above the P&F support and above the moving average line.  Should the price drop to the $28.00 level breaking below the P&F support, that would give us an initial projection to the $23.00 level for a decent decline but not a disaster.  This break would also break a secondary up trend line BUT NOT the primary line so some positive can still be gleamed should a break occur.  The primary line is at the $26.50 level.  My normal P&F criteria for a reversal requires both a support break and a primary up trend line break.  I do use a secondary line break when the primary line is so far away from the support break.

Without going into the details this week the ratings for silver are BULLISH for the long and intermediate term and BEARISH for the short term.  The very short term moving average line has just crossed below the short term line for the first time in several weeks confirming the short term bear.  As with gold the aggressive Stochastic Oscillator is in its oversold zone but has started a turn back to the up side and may suggest a rally within the next day or two.



We are starting to hear some rumblings that gold (and silver) have over reached their moves and a serious reversal may be just ahead.  Well, the performance of the gambling variety of stocks, the pennies, does not yet indicate any serious reversal eminent.  Reactions do happen and we may be seeing a reaction now but the Merv’s Penny Arcade Index remains very strong suggesting the speculators continue to put their money into the more speculative stocks.  This is not the actions of the speculators when serious declines loom ahead.  While most Indices declined by more than 7% this past week (see the Table at the end of the commentary) the Penny Arcade Index barely moved.  It declined by only 0.2% and not even noticeable on the weekly Index chart.  Since bottoming out in Nov of 2008 the Merv’s Penny Arcade Index has gained 2008% in value, this is a 20 bagger move.  Not bad for an average performance of 30 stocks.  Of course these stocks have not all been in the Index during this whole period.  The Index gets updated as required based upon the continuing performance of the component stocks.  Still, 2008% gain in two years is not so shabby.  There WILL come a time when things fall apart and the pennies will take a real drubbing but as shown in the past, these stocks decline about on an EQUAL basis as the decline of the top quality stocks.  The thing is not to keep holding for dear life during the decline.  Technical concepts should keep you safe.  So, what to look for?

Based upon weekly data as long as the Index remains above its short term weekly moving average line everything is roses.  As long as the short term moving average line remains above the intermediate term moving average line we are in a bullish intermediate term trend.  As long as the short term moving average line remains above the long term moving average line we remain in a long term bull.  At all other times, well one should check the ratings in the Table posted each week with these commentaries.

Merv’s Precious Metals Indices Table

Well, that’s it for this week.  Comments are always welcome and should be addressed to

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules