Working Money magazine.  The investors' magazine.
Traders.com Advantage

INDICATORS LIST


LIST OF TOPICS





Article Archive | Search | Subscribe/Renew | Login | Free Trial | Forgot ID?


PRINT THIS ARTICLE

DOUBLE TOPS


Weekly Chart For Gold Shows Danger

05/12/04 11:38:43 AM
by Gary Grosschadl

The price of gold violates a major pattern. Unless it bounces immediately, more downside is in store.

Security:   $GOLD
Position:   Sell

Traders who spotted the divergences on the displayed indicators did well to sell their gold stocks as the suspected double top did prevail. Now as the troughline has been broken to the downside (also note the 50-period EMA has been violated), traders are pondering whether the double top will fulfill to the measured downside mark, that being the $340 area. A double top is confirmed when the troughline is broken and this is the case here. The measured move is the distance from the troughline to the double top, as applied to the downside break below the troughline.

Three other possible supports have been drawn into the chart using dotted lines. The two higher possible supports are found at previous support/resistance areas at $365 and in the area of $355 as indicated. Below that is an area of major support between $355 and $339. This includes the psychological $350 mark, the double top fullfilment target at $345 and the 200-period EMA at $339.

Gold's weekly chart shows reasons for concern.
Graphic provided by: Stockcharts.com.
 
Traders should watch for any major reversal patterns occurring at or near those points. This will likely coincide with a stochastic reversal below 20 to rise above that 20 level. At the same time, the RSI (relative strength index) should confirm some bullish follow through by rising above its often crucial 50 level.



Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

Website: www.whatsonsale.ca/financial.html
E-mail address: gwg7@sympatico.ca

Click here for more information about our publications!


Comments or Questions? Article Usefulness
5 (most useful)
4
3
2
1 (least useful)

Comments

Date: 05/12/04Rank: 5Comment: 
Date: 05/17/04Rank: 5Comment: 
Date: 05/18/04Rank: 5Comment: 
PRINT THIS ARTICLE





S&C Subscription/Renewal




Request Information From Our Sponsors 

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

PTSK — The Professional Traders' Starter Kit
Home — S&C Magazine | Working Money Magazine | Traders.com Advantage | Online Store | Traders’ Resource
Add a Product to Traders’ Resource | Message Boards | Subscribe/Renew | Free Trial Issue | Article Code | Search

Copyright © 1982–2021 Technical Analysis, Inc. All rights reserved. Read our disclaimer & privacy statement.