CHARTWORKS - SEP 15, 2006
Metals Under Pressure
Technical observations of RossClark@shaw.ca
Prior action in
gold around periods of military conflict.
Sep 18, 2006
Gold prices are into oversold levels with a daily RSI(14) reading
of 29.08 on the 14th and follow through on the downside this
morning. As noted in July, in the past two decades it has taken
a reading below 32 to generate a tradable low following a military
incursion. This low reading has been necessary to offset the
overbought levels that occur when the conflict brings in the
investors who are sitting anxiously on the sidelines. Obviously,
there will be considerable overhead resistance starting around
$600 to$605 (the support level of the past two months).
The blue dots identify RSI(14) levels below 32.
Silver exhibited no signs of
divergence at last week's highs, but did manage to retrace a
Fibonacci 62% from the May highs. With prices down over three
dollars from the September 7th highs, it is now oversold with
a CCI(20) reading of -188. Anything below -150 is considered
adequate to create a bottom during September-October when the
market is in a rising trend (1972-74, 1977-80, 1982-83, 1987,
1993, 2002-2006). A confirmation of a bottom will occur
once the CCI moves back above -150 (as seen in recent
years on 10/14/02, 10/08/03, 09/13/04 & 08/31/05). Risk
can then be controlled at 2% below the interim lows.
The arrows identify
the CCI(20) move above -150 in the years 2002 to 2005
CHARTWORKS - SEP 15, 2006
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