Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

HUI Gold Bugs Fighting To Break Downtrend

Commodities / Gold and Silver Stocks 2014 Jul 23, 2014 - 03:41 PM GMT

By: Austin_Galt

Commodities

Cooooeee! That's the sound of the HUI Gold Bug bulls trying to find other bulls to push the price a little higher in order to break the downtrend. But the landscape appears desolate. The bulls don't seem to be stepping up when the going gets tough. Currently, price is tantalisingly short of the previous major swing high. Let's take a look at the daily chart to see what I'm talking about.


DAILY CHART

HUI Gold Bugs Index Daily Chart

The March 2014 high denoted by the blue horizontal line is the previous swing high and stands at 261.57. Breaking that level would be an achievement for the bulls and the first real goring of the bears in this battle. Until then, the bear continues to dominate the overall landscape.

I have drawn a black down trending line from the August 2013 top to the March 2014 high. The recent runup saw price clip that line before turning back down and closing below it. Price just wasn't ready to overcome that obstacle.

This high showed a bearish divergence in the Relative Strength Indicator (RSI) and now looks to be retreating. The Moving Average Convergence Divergence (MACD) indicator still shows the red line above the blue line indicating a bias for lower prices over the near term.

I have drawn Fibonacci retracement levels of the down move from the March 2014 high to the recent May low. One level that stands out is the 38.2% level which, if price retreated to, would conveniently close out the gap which I have outlined.

I still favour this rally has higher to go and I'd like to see price have another decent crack at the black down trending line and run some stops above there. I have added a lesser known Fibonacci level being 88.6% at 254.74 and I suspect that will be the final rally ending point. The market often takes things to the extremes and in this case I suspect it will keep the bulls on the hook for as long as possible. And perhaps this high will coincide with a RSI lower than the recent high. A little bearish divergence. Let's see.

WEEKLY CHART

HUI Gold Bugs Index Weekly Chart

I have added Bollinger Bands to this weekly chart and this highlights the correctional nature of trading as price bounces up and down between the upper and lower bands. The daily analysis suggests price can come down a little in the near term so perhaps we could surmise the middle band may provide support.

The Stochastic Indicator has rolled over suggesting lower prices, at least in the very near term, while the MACD suggests higher prices over coming weeks with the blue line currently above the red line. So perhaps price will go lower now but not enough for the averages to cross over and then price heads back up.

The chart appears to have been in a sideways consolidation since towards the end of 2013. And as it came into the consolidation from the upside, it should leave the pattern in the same direction - to the downside.

Let's wrap things up with a quick look at the monthly chart.

MONTHLY CHART

HUI Gold Bugs Index Monthly Chart

I have added my bastardised version of Elliott Wave. I'm not an Elliott Wave expert so if you're after some extensive, in-depth and by-the-book Elliott Wave analysis, you've come to the wrong place. I like to use EW in a generalised way that helps provide some structure to the picture. Price looks to be tracing out a Wave 4 which implies a final move to low , Wave 5, is still ahead of us.

The MACD indicator still looks to be trending up with the blue line above the red line so perhaps we could expect some more toing and froing in the next couple of months as price edges up and threatens the March 2014 high.

The Parabolic Stop and Reverse (PSAR) indicator shows price busting the dots to the upside a few months ago but price just hasn't gone on with the job. The nature of trading has been anything but impulsive so I believe price will shortly turn back down and break the dots to the downside as it puts in a final low, just above the 2008 low.

Taking out that oh-so-close March 2014 high would most likely be the kill shot to the bear. At the least a crippler. If that weren't to stop the bear then certainly taking out the August 2013 would be the coup de grace. Until then I'm not expecting any bull stampedes.

Bio
I have studied charts for over 20 years and currently am a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts there seemed to be a dearth of technical analysts, at least ones that had a reasonable idea of things. So my aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Please register your interest in my website coming soon. Any questions or suggestions, please contact austingalt@hotmail.com

© 2014 Copyright  Austin Galt - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules