The Gold to Crude Oil Ratio is Getting Jiggy
- Posted by Greg Harmon
- on November 6th, 2012
Gold ($GLD) and Crude Oil ($USO) went through a period of high correlation in 2009 which was quickly reset a bit higher in 2010 in to 2011. Since then though the relationship has been tenuous and may be on the verge of a major change. The ratio chart of Gold to Crude Oil below shows the two consolidation zones mentioned and now a break of a symmetrical triangle. That break is being retested now, and if it holds up there is a target of over 7 on the ratio, 36% higher than where it
stands today. The momentum indicators (RSI and MACD) shown in the chart are both supportive of a continued move higher as well. With Gold in the form of the $GLD at 163 and Crude Oil in the form of $USO at 31.60, that put broad limits on a potential move. With no change in Crude Gold would rise 36% to 222 and with Gold held constant Crude could fall to 23.15. Neither extreme is likely but it does suggest that Gold may be bottoming while Crude Oil is just taking a breather before another leg lower.
Join the Dragonfly Capital Views Premium Membership
Sign up here to get deeper analysis and nearly 50 trade ideas every week.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
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)
- Macro Month in Review/Preview August into September 2014
- Macro Week in Review/Preview August 29, 2014
- Premium Earnings 8-29-14
- Stocks and Bonds Rising Together – Its Not So Strange
- Keep It Simple: Ford Stock Is Rising So Buy It
- Premium Earnings 8-28-14
- The Relative Weakness in Gold Aint Over Yet
- Eyeing a Meal and a Trade in Buffalo Wild Wings
- Premium Earnings 8-27-14
- Re-Emergence of the Emerging Market ETF