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Is It Time To Nibble At Gold?

08/24/07 09:42:50 AM
by Koos van der Merwe

The XAU i-Share is close to thinking so.

Security:   XAU-T
Position:   Accumulate

Figure 1 shows the XAU with Donchian channels. (20,0). The blue and red arrows on the chart are suggested buy and sell positions. In all cases I have suggested a buy when the Donchian lower bar has been reached and the stochastic oscillator (8,10) is below the 20 horizontal line and has given a buy signal. A sell signal is when the upper Donchian channel is reached and the stochastic (8,10) is oversold and given a sell signal. At the moment, the i-Share does appear to be touching the lower Donchian channel, but the stochastic oscillator is not quite oversold although it does appear to be touching the 20 level. We could wait for a lower level before buying.

FIGURE 1: XAU i-Share WITH DONCHIAN CHANNELS. The blue and red arrows are suggested buy and sell positions.
Graphic provided by: AdvancedGET.
Figure 2 suggests that although a buy signal is close, it has not been triggered yet. My indicators used are as follows.

a. Superimposed on the index is a Fisher transform of the MACD of the highs. This indicator is still suggesting weakness.
b. Rapid RSI modified. Although the indicator is playing with the lower level, it has not yet suggested a buy signal.
c. The stochastic RSI is still falling.

FIGURE 2: XAU i-SHARE WITH VARIOUS OSCILLATORS. A buy signal may be close, but not just yet.
Graphic provided by: MetaStock.
Although the XAU i-Share looks promising, a buy signal has not been given as of yet, but it is worth watching because a signal could be triggered in the near future. Is it time to nibble at gold? Not yet, but you could taste it.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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