Friday, September 7, 2007

The bullish count



Here is the xau bullish count on the RST. It looks plausible. About all we can do here is wait for some bullish consilidation of these gains. In my opinion the gains are too much too fast for a breakout to occur on this daily run. So we will watch and be ready to act. If this count is correct then price will not return to the lows. Rather some modest fibonacci retracment will do.

S.M. Himes

Thursday, September 6, 2007

The dreaded megaphone



Well, the impulse down ended in spectacular fashion and a pattern has emerged. The pattern is one of expanding volatility, otherwise know as the Reverse Symmetrical Triangle (RST). What is fascinating about this pattern is how it has followed a traditional zig zag pattern which occured after last years peak. These patterns are pretty hard to trade. The best rule I can provide is to make sure you reverse at the extremes or go flat. Eventually the pattern completes and a stable trend emerges. That is the ultimate surity the pattern provides. As markets are guaranteed to return to the mean so is the RST pattern guaranteed to return to lower volatility. Im sure you all would like me to declare the direction this pattern will terminate in. I guess I really don't know. It seems likely to me that the direction will be up since its a bull market. The next big question is have the final lows printed. I would expect at least 5 waves in the RST pattern. You can see it all depends on how you count. If I had to guess right now i would say the landscape is set for a high in the 160 area, followed by another trip to the lows. It may or may not reach the lower rail this time. My guess is it wont and a bull market will emerge.

S.M. Himes

Gold Seasonality

Gold Seasonality
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