Yellow Gold vs Black Gold
- Posted by Greg Harmon
- on May 3rd, 2012
The Gold ($GC_F, $GLD) to Crude Oil ($CL_F, $USO) ratio is showing signs of a big move to come soon. The daily chart below is running into the apex of a descending triangle at a ratio of 15.25 with a target of 8.25. That is extreme. But given how far it is into the apex a full move becomes less likely (2/3 into the apex is generally the best chance for a full move). Still the lower highs and
impending 3rd touch of support looks like more downside to come on a break. The falling Relative Strength Index (RSI) also supports a move lower. So if it s not likely to get all the way to 8.25 where may it go? Pulling out to the weekly chart suggests that it may shift lanes in the super highway down to the 12.80 support level. That is not good news if you are a gold bug or are tired of $4/gallon gasoline prices. The move lower would indicate a relative shift in strength from Gold to Crude Oil, Gold weakening and Crude Oil strengthening. This fits the daily and weekly charts for both Gold and Crude Oil from the Macro Week in Review/Preview April 28, 2012 (premium) and SPY Trends and Influencers April 29, 2012 (free) posted this weekend. Are you ready for that?
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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