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Many investors are expecting the bearish to sideways trend in gold to reverse some time, may be, on announcement of stimulus measures. But a research analyst at Wyatt Investment Research points out that gold has a cha..

14 Aug 2012

RICHMOND, USA (Commodity Online): Conventional wisdom and most analysts opine that gold is in a consolidation phase waiting for the stimulus measures to be unveiled globally to move higher but a research analyst points out that gold could struggle for another five years as ‘a reliable in the 15 year charts of the yellow metal suggests it is going lower’.

Jaison Cimpl, Research Analyst at Wyatt Investment Research points out that this signal has appeared only six times in the past 15 years of price movements he has studied.

The first step of the ultimate fall has already been completed in March and gold remains in consolidation phase perhaps waiting to move up, but it is not happening. Jaison Cimpl in his chart analysis points out that the two step process for the signal to work happens this way: 1) prices cross the 50 week moving average 2) it has to m ove in that direction to go higher.

After the 50-week moving average is crossed, the price must move in that direction long enough to form a backtest. A backtest simply implies that price comes back to kiss the 50-week moving average (not breach it) and then continues in the prior direction.”

“Traders need to watch the second step for possible change of direction. First, gold needs to rise back up to around $1,667 (roughly 3.5% higher). Sellers then need to provide resistance in that area and turn gold prices lower. Once such an action occurs, gold should stay in a negative trend until buyers can retake the 50-week average. Such a negative trend may last for many months … perhaps years,” Jaison Cimpl says.


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