The price of
gold is forming into a sideways base that after several weeks, has experienced
minimal downside. This is an encouraging sign because it’s a testament to the
metal’s underlying strength. It also provides technical evidence that price has
the ability to hold, and that there is indeed, “life on the floor.”
In addition
to the array of sentiment and internal indicators that now all point to a major
bottom; only one--- focuses on TIMING. The moving average--of gold, stocks,
what have you, essentially traces price information of the past, but applied to
the present. And a good rule of thumb is to wait for the moving average to
catch up, flatten out, and then change direction to confirm a bottom.
But do not
ignore price alone. After all, price determines its own fate and the moving
average is merely a fine tuning. Together, the two provide a technical
interpretation that is more insightful than observing one independently from
the other.
The twenty
day moving average is a case in point, and perhaps very fitting because it
encompasses the short and intermediate term price action. Twenty trading sessions
equates to one month of time; and most trendless markets tend to run about six
to eight weeks before presenting a directional move. Overlaid on gold, the slope is not only
beginning to arc sideways, but now resisting the most recent decline. To
explain this, older (minus) readings are being replaced with newer (positive)
readings, which on a time scale of twenty trading days, absorbs a broader development
and not so much, the short-term gyrations.
Gold remains
very much locked in a basing chamber, both seen by price and a trendless moving
average. But all factors included, the current bottom forming is, shall we say,
“nearing the end of its time zone.”
The climate down below is improving, and looking
favorable, more than it ever has before. The inevitable chain of events is predictable;
where price ultimately must leave the ‘basing phase’ to begin trending again.
And undoubtedly this will cause the twenty day moving average to rise. 
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Darah
