Friday, 4 March 2016

Golden Cross on Gold Price Chart

It seems nobody is talking about the 50-200d golden cross that just occurred in the spot gold price chart. Maybe the bull market in gold market is already a forgone conclusion, and so nobody really needs any more confirmation.

Still, I think it's good to have yet another technical indicator to confirm the trend because there's no such thing as too many positive signals.

6 month gold chart (ending 3 Mar 2016)
6 month gold chart (ending 3 Mar 2016)
(Click to enlarge)

There has been consistent technical buying in this early phase of the gold bull run.

Take the 2 large up bars in the above chart in the last 3 weeks.

The 1st one occurred on 11 Feb, the next day after the gold price went over 1190, which is a price point that marks BOTH the previous height of the cup and handle formation AND the breakout point of the descending trend line that lasted for much of the gold's bear market as seen in the chart above and below.

Gold chart showing break out of downtrend line
Gold chart showing break out of downtrend line
(Click to enlarge)

The 2nd large up bar occurred yesterday (3rd March 2016), a day or two after the golden cross is printed on the chart. You could say that this spike came from those who have been sitting on the sideline, waiting for this golden-cross signal to appear before going in.

You could even say that this 3 March spike is cause by BOTH the playing out of the cup and handle formation AND the golden-cross signal.

This bar is of course smaller than the 11 Feb bar because that one is more significant from a technical point of view, and gold price has already had a good run-up since its 2015 December low.

Oh yes, this gold rise since Dec 2015 has been accompanied with increasing volume, indicating that this is a real deal.

What is interesting about the steady rise in spot gold in in the last 2 weeks is this:

the gold has been up in the background of falling stock market in the months of Jan and 1st half of Feb. Interestingly, or significantly for gold bull trend, the gold price had been on a steady rise for the 2nd half of Feb when the stock market has been on the rise, as well as rising oil and falling VIX.

Perhaps, gold bulls believe this stock market  rise is nothing more than a bear rally.

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