Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Friday Price Surge, Volume Will Point the Way

Commodities / Gold & Silver 2009 Aug 02, 2009 - 06:39 AM GMT

By: Merv_Burak


Best Financial Markets Analysis ArticleIf it wasn’t for Friday it would have been a miserable week for gold.  It would be interesting to know the trading volume on Friday (it’s not usually available until Monday, for what reason has always been a mystery to me).  More about this volume business below.


Last week I commented about the fact that there is no fundamental analysis in these commentaries.  That’s just not my thing.  However, I left out what actual technical commentary one might expect while reading these missives.  There are continually new readers who are not familiar with the info they might find here or understand what the info is intended to portray.  Herein, just a very brief summary.

As everyone understands there are three investment/speculative periods of concern, short term, intermediate (or medium) term and long term.  I’m not going to try and define in minute details exactly the days or hours each refers to, they are just general terms.  I try to define how gold is positioned relative to these three time periods from a technician’s standpoint.  To do this I look at three technical indicators that help define where gold stands.  These indicators try to define the existing trend of gold relative to each time period, the strength or weakness of such trend, again relative to each time period and the volume activity (i.e. speculative interest) relative to each time period.  The indicators used are relatively simple and quite common, nothing fancy here.  I leave the fancy and sophisticated for the trading system being developed and expected to be available later this fall.  In the end I put the three indicators together and come up with a technical rating AT THAT MOMENT IN TIME, for each time period.  The Table posted at the end of these commentaries gives a summary of similar information although the pre-defined mathematical formula may be somewhat different than what I use in the commentary and therefore the ratings may, at times, be just a little different.

Although from time to time I may use point and figure charts, or some chart patterns, to assess where one might assume a move to go, these commentaries ARE NOT intended as predictions of the future.  A technician does, however, follow the rule that “a trend in motion remains in effect until a reversal of motion is confirmed”.

Simplicity in the indicators, simplicity in the charts, simplicity in the analysis.  That’s what my aim is here.  Whether I actually provide such is an individual judgment by each reader.


I always start these commentaries by looking at the long term position of gold.  One should start with understand the “big picture” first before getting into the details of the shorter activity.

As mentioned last week the long term P&F chart has now provided us with a good support level to watch for a reversal of trend to the bear side.  A move to the $900 would break below such support. 

Also on the P&F chart one can see a symmetrical triangle pattern forming.  It is not a perfect symmetrical triangle, but close.  I prefer to call this pattern a reverse megaphone with the action heading toward the megaphone mouth.  This pattern is often though of as a continuation pattern with the activity breaking on the up side and continuing the previous bullish move.  This pattern is also visible on a normal bar or candlestick chart.  Although no pattern is perfect I will go with the consensus that an eventual upside break will occur on this pattern.

As for the normal indicators, gold remains above its positive sloping moving average line and the momentum indicator remains in its positive zone and above its positive trigger line.  As for the volume indicator, it had moved above its previous February high on Monday and remains above its positive trigger line.  The long term rating of gold remains BULLISH.


I find the intermediate term the more important time period to understand.  For a weekly commentary too much could happen during the week to change the short term prognosis and as for the long term, one can go to sleep for months with no change in its status.  It’s the intermediate term one needs to watch for changes in trend.  They do not occur overnight (although they might on a rare occasion).  You could see changes taking place over the span of a few weeks and this is seen in the intermediate term.

Last week I also showed how the gold action of the past several months has been trapped inside a box.  This week it continues inside that box.  This wide lateral trend has the unfortunate result of having the price of gold moving up and down, above and below its moving average line.  During the week the price of gold moved below the moving average but Friday’s action took it above again.  The moving average line ended the week in a positive direction but that also depends upon the up and down movement of the gold price.  Until gold moves out of the box we can continue to see this up and down movement, frustrating our analysis.  The momentum indicator is also gyrating but remains most of the time above its neutral line in the positive zone. 

Moves into the negative zone have been few and short.  Friday, the momentum indicator remained in its positive zone showing positive strength in the recent price moves.  It is also above its trigger line which was trending negatively but the Friday action turned it back to the up side.  Another indication of the intermediate term trend is the short term moving average line.  This moving average line crossed above the intermediate term line the previous week and has remained above the intermediate term line since.   The volume indicator remains in a positive trend and above its positive intermediate term trigger line.  All in all, as of Friday close the intermediate term rating must be BULLISH.


I mentioned volume in the opening remarks.  On Monday we had fairly high volume with the gold price doing nothing.  The next day we had another high volume day with the price plunging.  On Friday the stock zoomed higher but we do not know what the volume of trading was.  Is it important?  You betcha.

If the volume was high then maybe the rebound could be a precursor to better prices ahead.  If the volume was low, as with the previous couple of days, then the Friday bounce may be short lived with no speculators interested on the up side.  Why do we not get the end-of-day volume for futures trading until a day later?  Is the futures trading industry still in the 1960’s without computer technology to provide volume information along with the daily price data?  It can’t be that difficult.  Or are they just not that consumer oriented?

The short term has its ups and down similar to the intermediate term.  Gold dropped below its short term moving average line on Tuesday with the line turning down.  Friday has seen the price of gold move above the moving average line and the line has turned upward again.  The same fluctuation can be seen in the momentum indicator.  It is once more in its positive zone and above a positive sloping trigger line.  Without the knowledge of the Friday volume I must rate the short term based upon known information.  The short term rating is BULLISH.

The immediate direction of least resistance appears to the upside.  Although the Stochastic Oscillator is still in its negative zone the direction of motion is aggressively to the up side and one more positive day and it will be in the positive zone.


The situation with silver versus gold has not changed.  Silver still has the better performance over the intermediate and long term but continues to lag gold on the short term.  While gold is only some 5% below its previous recovery high silver still has a long way to go.  It still needs another 50% move to get to its previous highs.  The P&F chart is quite instructive in this matter.

On the P&F chart the red is down trend or resistance, the blue is up trend or support.  The heavy lines are primary lines while the lighter lines are secondary.  We are still in a BULL trend per this P&F.  The P&F projections are to $18.50 and then to $24.50.  Now, as mentioned earlier, these ARE NOT predictions, what they are are suggestions for the projected move so that speculators may make their initial judgments as to market action.  You always let the market action decide what your on-going action should be, whether projections are met or not.  What this does suggest, AT THIS TIME, is that there still is a significant potential for more upside in silver.

Looking at the indicators they are similar to gold but not identical.  On the long term silver is above its long term moving average line and the line is sloping upward.  The momentum indicator was in its negative zone but has moved back into the positive.  It also is above its positive trigger line.  The volume indicator is showing resilience relative to the price trend.  Throughout the very recent decline and minor bounce the volume indicator moved in a basic lateral path.  It remains in a lateral trend although it is above its positive long term trigger line.  All in all, the long term rating is BULLISH.

On the intermediate term silver has moved just above its moving average line but the line has not yet turned up.  The momentum indicator has moved slightly above its neutral line and above its positive trigger line.  The volume indicator remains above its positive trigger line.  On the intermediate term the rating is BULLISH.

Everything is also okay on the short term.  As with the other time periods the indicators are very close to reversal locations.  Their positive showings are very precarious and could change with one negative day.  In the mean time the short term rating is BULLISH.



Dem that rises the most falls the most, or is it Dem that falls the most rises the most.  Whatever.  We have both here in the Penny Arcade.  These real penny stocks, prices at or less than $0.25 at time of inclusion, make huge moves, when they move.  Although the decline is the worst of the bunch in the Table below, for the short term, it is also the best performer from the intermediate and long term.  What other Index of 30 stocks has risen 540% in only 7 months.  Few single stocks have done as well, least of all an average of 30 stocks.  Of course it has come down and is still 16% below its previous high but all it would take to get back up there would be one or two good weeks.  Penny stocks are not for everyone but most speculators in the gold market have a few in their portfolio.  Wouldn’t it be great to be in the ones that are moving rather than the ones that are doing nothing.  Of course timing is important.  The Penny Arcade is presently the only Merv’s Index that has not gone BULLISH (POS) on the short term rating.  All Indices are still NEG on the intermediate term and POS on the long term.  So, all is not lost and the long term prognosis remains on the up side.  This should pull the intermediate term up shortly. 

It was an unusual week in the stocks.  The AVERAGE price of the 160 stocks in the Merv’s Gold & Silver 160 Index gained 1.8% and most of the Merv’s Indices were on the up side while every North American gold indices were in the negative camp.  This, despite the fact that both gold and silver were up a little on the week.


Well, that will be it for this week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak Archive

© 2005-2019 - 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