Technically Precious with Merv

For week ending 11 February 2011
The upheaval in the Middle East has done nothing for gold. It looks like gold is ready for more
downside action. A move to $1305 would not be good. The “Penny Arcade Index” is still okay
so any downside activity shouldn’t last for too long.
GOLD
LONG TERM
First, the P&F chart. As mentioned previously, it had given me a bear signal but there was still
a support at the $1320 mark to be overcome before really going bearish. This requires, on the
P&F chart, a move to the $1305 level, which the price has not yet met. So, we are in limbo for
now. A move to the $1305 level would also cross below the long term moving average line
and turn the line downward further confirming the bear, at that time. So, we wait.
Looking at the usual indicators, the price of gold remains above the long term moving average
line. The line itself is still in an upward slope but is turning towards the horizontal ready to turn
down on the slightest provocation. The long term momentum indicator continues in its positive
zone and is once more above its now positive trigger line. However, weakness is shown in
that it just can’t seem to get any significant upward trend going. The volume indicator seems
to have topped out and is in a basic lateral drift. It continues to move above and below its
trigger line in the process. It is below the trigger on Friday however, the trigger is still very,
very slightly in a positive slope. All in all the long term rating still remains BULLISH.
INTERMEDIATE TERM
On the intermediate term we have a somewhat less favorable story. Gold continues to track
below its negative sloping moving average line. The intermediate term momentum indicator
has now moved above its neutral line into the positive zone and above a positive trigger line.
As for the volume indicator, it continues to be basically below its trigger line and the trigger
remains in a negative slope. On the intermediate term the rating is only at the – NEUTRAL
level, one step above a full bear. The short term moving average line, although moving
upwards, is still below the intermediate term line for a negative reading and confirmation of the
negative rating.
SHORT TERM
Although it looks like we are in a short up trend it also looks like a topping activity getting ready
for some more down side action. A drop below $1350 would put us into such a negative
phase. For now gold price remains above its short term moving average line and the line
slope remains upward. The momentum indicator is just very slightly above its neutral line and
above its positive trigger line but that could change with another negative day of activity. The
daily volume action is still pretty low and below its average volume over the past 15 days. For
now the rating remains BULLISH with the very short term moving average line confirming. (more)