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Currency Alerts Suggest An Interim High in Gold Soon

Bob Hoye
Institutional Advisors
Posted Oct 8, 2010

Both Friday and Tuesday generated downside Capitulation Alerts in the US Dollar Index and upside Exhaustion Alerts in the Euro. In the eleven instances (dating back to 1975) where gold was trending higher, above a rising 200-day moving average, and the US Dollar Index generated a downside Capitulation Alert the bullion made an interim top shortly thereafter. The number of days and percentage that gold moved higher following the alert had a direct correlation with the depth of the correction. No rally extended more than eight trading days (Oct 13th?). Once the top was in place the drop to the 50-day moving average occurred within 14 trading days. The moving average sits at $1262 and is rising at $3 per day.

(Click on images to enlarge)

Capitulation Alerts in the US Dollar resulted in the following gold action

Other points of interest

  • The summer consolidation produced a measured target range of $1330 to $1350, suggesting that any price action beyond here would be into a blow off phase as most recently seen in December 2009.
  • Gold has moved out of the steady upward channel from the August bottom and has now entered the exponential phase, generally seen in the final stages of rallies.
  • Gold is now ten weeks into the rally since generating the first higher weekly low on August 6th. Uninterrupted rallies tend to last nine to twelve weeks.
  • A weekly Sequential Sell Setup is occurring this week in gold. A price high within the following week generally produces a decline to the 34-day ema.
  • Daily Sequential Buy Setups are in place in the US Dollar and Sell Setups in the Euro. Reversals can be expected any time and will be confirmed with moves through Monday’s high in the Dollar and low in the Euro.

The percentage appreciation after the US Dollar Alerts is noted


Oct 6, 2010
Institutional Advisors

Hoye Archives

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