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Gold - The deeper the break. . .

Technical observations of

Bob Hoye
Institutional Advisors
posted April 19, 2005

- Pattern Requirements for a Significant Low are in Place -
- Buy Signals can Occur as Early as Tuesday -

The pattern from the December top continues to unfold in a similar fashion to seven previous examples we have reviewed over the past thirty-five years. Successfully holding above the February low of $410.50 through the end of April can lead to a very bullish advance.

In the March 27th report it was determined that the initial "A" leg decline from the March 11th high ($445) was pretty much complete. The "B" rally was likely to find resistance in the mid $430's. As it turned out, the price was capped at $430 on April 13th. The "C" leg was expected to complete the downside correction from the $445 high, holding above $417 and producing an RSI(14) reading in the 30's. As stated: "we can extrapolate a narrowed time window for the next important low; April 6th through April 14th." On the 14th, gold broke to a new low producing an RSI(14) reading of 39.9.

While we've established that a buy signal in the long term MACD(34,89,9) would confirm an upside reversal, we would like something more concise on a short term basis. Therefore, the CCI(20) oscillator is being introduced as a better means of determining that the "C" leg decline is complete. If the gold price stays under $424 on Monday the CCI will generate an oversold reading well below -100. The deeper the break in the oscillator, the more convincing the subsequent buy signal will be. Assuming the oversold reading occurs, we can buy as soon as the oscillator moves back up through -90. Risk can be maintained below the immediate lows.

This would set the stage for an assault at the March highs and if true-to-form a measured move into the $510 to $530 range. Such action would be bound to have a significant influence on the mining stocks.

The oscillators can be tracked using the following link: click

Previous examples over the past 35 years.
(1971,' 73,'74,'77, '78, '87 & '02)

Bob Hoye
Institutional Advisors

CHARTWORKS #2 - APRIL 18, 2005

Hoye Archives

The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.

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