• 10 hours Tesla Set To Deliver 1 Million Electric Vehicles Next Year
  • 1 day Holiday Spending Already Soaring Amid Pandemic
  • 2 days Another Stock Market Crash Could be Looming
  • 3 days Trump Loses Another Leg Of The WeChat Battle
  • 4 days DOW Plunges Amid WInter COVID-19 Surge Fears
  • 5 days Big Profits Are No Longer The Top Priority For Oil Investors
  • 6 days Banksy’s Littered ‘Monet’ Sells for $10M
  • 8 days Three Renewable Energy IPOs To Watch
  • 9 days Bitcoin Nears $13,000 As PayPal Joins The Crypto Fray
  • 9 days DOJ Declares The Obvious: Google Is A “Monopoly”
  • 11 days Alibaba Is About To Make History Again
  • 12 days Robinhood Users Are Latest Target Of Pandemic Hackers
  • 14 days The Hydrogen Boom Will Provide A $200B Boost To Wind And Solar Energy
  • 15 days Will The 5G Rollout Overshadow This Major Merger?
  • 16 days Corporate Bitcoin Holdings Boost Crypto Confidence
  • 17 days Indonesia Rolls Out Augmented Reality Innovation To Combat COVID
  • 17 days Banks Are Getting Rich On Pandemic Overdrafts
  • 18 days The Real Reason China Is Betting Big On Renewables
  • 18 days Europe Wants To End The Big Tech Monopoly
  • 19 days New Breakthrough Could Transform Rare Earth Mining
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

  1. Home
  2. Markets
  3. Other

Has Gold Topped? Has the Dollar Bottomed?

This is the question that gold investors everywhere are asking right now as gold has taken its second sharp decline in the past four months. The U.S. Dollar index, meanwhile, is showing faint signs of life after a nearly relentless decline since its August peak. Is this the start of a prolonged rally in the dollar and a sustained decline in gold? Or is it just another temporary pullback for the yellow metal while the dollar gets a much needed respite before continuing its decline?

For answers we must turn to the charts. It's quite revealing to compare the parabolic structure of both gold and the dollar, both separately and comparatively.

Below is the daily dollar index chart. The most outstanding feature of this chart is that, despite the immediate-term rally underway, the dollar has bottomed to the right-of-center of the parabolic bowl in the chart. In Parabolic Analysis this is typically bearish, i.e., it suggests a breakdown of the bowl is soon forthcoming. Of course, the most obvious feature of this chart is that a 5-month downtrend line is still very much intact and has not even been tested yet. It currently intersects the 89-90 area and converges with the falling 60-day moving average (direction). The 30-day moving average (momentum) intersects at 87.70 and the 90-day moving average (bias) is also declining through the 91.21 level at present. Thus, the momentum, direction, and bias for the dollar are all still down right now.

Now what about gold? Has the gold market seen its top? Obviously an immediate-term top was registered recently at the $430 area and after failing to penetrate the outer rim of the parabolic dome in the daily chart (see below), gold was forced downward under this pressure and has slightly penetrated under its 30-day MA. While this action is bearish, immediate-term, the trend and bias for gold are still up. A 6-month uptrend line and a parabolic bowl intersect along with the 90-day moving average at the $394 area, and there is another important psychological support at the $400 area that hasn't been tested. So in my opinion it's still too early for analysts to suggest that gold has "given up the ghost."

Another reason I believe gold will retain its bullish overall position through this correction is that the recent top was too far over to the right-of-center of the parabolic dome pattern shown above. You see, whenever price peaks beyond the "vertex," or mid-point, of a dome pattern it usually translates into a brief, sharp downward correction followed by a reversal back upward and then a continuation of the previous upward trend. This remains to be seen but the odds favor it based on past history.

Back to homepage

Leave a comment

Leave a comment