- The indicators used are the Bollinger Bands, RSI, and Slow Stochastic.
Quick Summary: Commodity prices have experienced a short fall in prices as the USD has wavered in value. However, the prices of Gold, Silver, and even Crude Oil have been building towards sharply volatile movements. As the USD is beginning to show signs of weakness from improved consumer confidence and an increase to risk appetite, commodities are beginning to show the early signs of an increase in value. The technical analysis for Gold below, and the previous article on Silver by Anton Eljwizat, both demonstrate how the price of precious metals is anticipating a sharp jump in value.
- Point 1: The Bollinger Bands on the hourly chart are clearly beginning to tighten, signaling an impending volatile price movement.
- Point 2: The RSI on the hourly chart shows the price floating just above the over-sold territory, signaling that there may be room for a very small downward movement before the volatile movement occurs.
- Point 3: The Slow Stochastic on the hourly chart shows a fresh bullish cross which indicates the next significant movement may be upward.
- Points 4 and 5: These two points represent 2 things. The first is the breach of the upward trend which has been highlighted in red. The second is that this upward breach occurred directly following a head-and-shoulders formation and a subsequent correction back into an upward trend.
- Points 5 and 6: These 2 points together imply something significant for traders. The first is that the RSI at Point 6 demonstrates that there may still be room for a very small downward movement before Gold enters the over-sold territory, which means the downward movement following the head-and-shoulders at Point 5 may not yet be finished.
- Point 7: The Slow Stochastic on the daily chart illustrates a clear bullish cross which means the next significant movement will likely be in an upward direction.
- These points together signify that Gold may be preparing to enter another upward trend similar to the previous 2 highlighted in red.
- Since the price of Gold can move very rapidly compared to most other currencies and commodities, and since 1 pip ($0.01) of a Gold position is worth $1.00 for forex traders trading the minimum amount of Gold, there is high potential to earn lucrative amounts of money from this impending move. Think I’m wrong? Open your own account and test this theory for yourself.
Edited by forexyard, 18 June 2009 - 03:04 PM.