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XAU and HUI at an Important Crossroad

Technical observations of

Bob Hoye
Institutional Advisors
November 5, 2004

It is now 23 days since the HUI generated upside exhaustion. This was the first overbought reading since the bullish crossover of the 20 and 50 day moving averages. An A-B-C style of consolidation was anticipated.

Prices have now consolidated similarly in pattern and time to what was seen in 2001, 2002 and 2003 (17, 19 & 23 days).

  • The RSI is below 50 as we'd been hoping to achieve as the consolidation nears its conclusion.
  • The 20-day standard deviation band is close to being tested.
  • Prices have declined to the 40-day moving average.
  • Finally, my proprietary summation index has generated a short term oversold reading in the same fashion as we observed in the previous three examples.

The first day with a higher high should suggest the bottom is in place. Once it is followed by a MACD signal we'll have an even better confirmation. For traders, risk can be controlled at the lows of this consolidation.

Bob Hoye
Institutional Advisors


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