Dollar!!!

Gold Views!!!

I am taking on the Gold this week for analysis. Never looked at it earlier, so thought why not give it a try and see how I interpret the charts. As usual I begin with the weekly chart and move to the daily. So here it goes;

The Weekly Picture:

Gold is very delicately placed for a good breakout. A good push and it is sure to break the clusters of resistances it’s sitting at. Speaking of resistances; we have the 20 (810) and the 50 (825) EMA’s (Green and Blue lines respectively). It’s just managed to close a wee above the 38.2% retracemnt taken from the March highs October lows. The RSI below has broken its short term trend line, the MACD lines are willing to give a buy signal will Gold play Ball? Weekly range for now stands at 850 on the top and 750 on the lower side. The Bias? Bullish!

The Daily Picture:

If it was 38.2% retracement on the weekly chart, in the daily Gold is facing resistance at 61.8% of the swing marked on the chart. Plus there is the 200 EMA it’s trying fend off. A nice converging of the 20 and the 50 EMA’s are there to cushion the fall. The flip side is that the MACD histogram is showing bearish divergence. The RSI is at 60 from where it has been reversing lately. Let us see how it unfolds in the coming week. My amateurish eyes see a CNH pattern (shaded area in yellow), and with ADX below 20, I am hoping that any break above the current resistance will be followed by ADX also showing strength thereby confirming a strong uptrend.

The Potpourri:

Well if I am writing about Gold I might as well write about Silver and Dollar too. The chart above is nothing but a collage of things we are discussing(actually its one of my templates I have saved). Like Gold, Silver is also critically poised for a breakout. As for the Dollar and Gold, it’s a proven fact that they move in opposite direction. A quick check of the Dollar chart and you will see if it is showing bearish bias. So time to sell the Dollar and buy Gold or Silver? Well so much for my amateur analysis, all comments and suggestions are welcome so that I can improve upon my analysis.

"Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude." Thomas Jefferson

Nifty Views!!!

I am actually bored writing about nifty as it is doing nothing other than keeping both the bears and bulls on tenterhooks. Below is a very simple chart (had to make it colorful...man you ought to feel you are putting work behind it!). The chart in itself is self explanatory; we are in range, and between this broader range we have some pretty tight intraday ranges, so the only way to play such range bound moves is selling the highs and buying the lows. In fact sell at resistances and buy at supports sounds better (gives it the professional touch)! For the fence sitters the wait has been long and frustrating but it will pay. Patience always pays! As for others if you good at ping pong, well you have a game!

"First say to yourself what you would be; and then do what you have to do." Epictetus

Divergence!

Just a few days back I had written about divergence. Well it’s a favorite trade set up of mine so thought would make another post out that with illustrations. Two reasons for doing this, one, this is my blog, two, I wanted it in my blog for future reference. As Pring states when the momentum and price are moving in tandem, there isn’t much to read other than assuming we have a healthy trend. It is when the momentum and price get out of sync we have Divergence in hand.

There are 2 basic types of Divergence.

REGULAR DIVERGENCE

1-Price is making higher highs while the indicator is not: Bearish

2-Price is making lower lows while the indicator is not: Bullish

HIDDEN/REVERSE DIVERGENCE

3-Indicator is making higher highs while price is not: Bearish

4-Indicator is making lower lows while the price is not: Bullish

Divergences test your patience, you have to let them develop and then get ready to put in your trade. One of the mistakes us novices make is we jump the gun too soon when we spot Divergence. It should be remembered (I might as well put this in bold font to drive home the point), Divergences in themselves do not signify a reversal or a trend change, they merely gives us an advanced warning of the underlying strength or weakness in the prevalent trend. The real confirmation comes from the Price action itself.

There is a lot one needs to understand about Divergence, than these simple interpretations. The significance of Divergence, the Divergence Trap and Complex Divergence (will add these later). I reiterate again that one should read Pring’s book on Momentum to get better hang of things. Divergences if traded right, can give phenomenal trades, but then you need to spot them, and wait patiently to let them develop, and finally pull the trigger when the PRICE gives the signal!

"Whether you think you can or think you can't, you're right." Henry Ford

GAPS!!!

These are just a few instances how we can play the gaps. The charts below are self explanatory. These are not exactly how the gaps would play themselves out, but would give you an idea, if such a situation occurs then these might be the possibilities. This is in keeping with the theory of KISS. By the way the conservative trades mentioned in the pictures below are nothing but the Dow Theory in action!!!!

First The Gap Ups;

Now The Gap Downs;

"If you are aware of your weaknesses and are constantly learning, your potential is virtually limitless." Jay Sidhu