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#1 fib_1618

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Posted 03 December 2003 - 08:41 PM

For perspective - monthly - weekly - and daily.

I think the charts speak for themselves...just remained focused on what is truly important in all of this - and that's the technical price action.

Fib

Now at the highest monthly close since 1993.


http://stockcharts.c...J8606826,Y].gif

Breakout of the 15 year line - a small snapback - and moving relentlessly higher since (as if it has a mission).

http://stockcharts.c...15142210,Y].gif

And still trading above $400 for the second day in a row - with little or no fanfare (does the pattern within the green borders look familiar?).

http://stockcharts.c...14833937,Y].gif

Better to ignore me than abhor me.

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"Beware of false knowledge; it is more dangerous than ignorance" - George Bernard Shaw

 

Demagogue: A leader who makes use of popular prejudices, false claims and promises in order to gain power.

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#2 uncleharley

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Posted 03 December 2003 - 09:32 PM

Is there a metod for predicting if a handle will form on the 7 yr cup and if so, is there a normal size relationship between the cup & handle? I haven't been able to find anything thru my sources. :(

#3 dougie

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Posted 03 December 2003 - 11:22 PM

thought cup and handles were continuation patterns and 1/3 was the norm.

#4 fib_1618

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Posted 05 December 2003 - 12:50 PM

Is there a metod for predicting if a handle will form on the 7 yr cup and if so, is there a normal size relationship between the cup & handle? I haven't been able to find anything thru my sources.


Hi Harley

Sorry for the delay in responding as I tend to forget to check this board from time to time.

The cup and handle was actually coined by Bill O'Niell and is actually a "rounding bottom" technical formation in which the handle formation may or may not be apparent.

The handle, when it does appear, is usually because of longer term technical price resistance in which the chart maybe up against, so I wouldn't neccessary expect a handle to form off of every single rounding bottom formation. All of this solely depends on the market dynamics of the chart in which you're looking at.

So, to answer your question, there is no "method" that I know of - except that if the price pattern shows a previous area of congestion (like the 1993-1996 period shown on the monthly gold chart) one can "assume" that a handle would be the expectation - but you know what they say when you "assume" something (you make an @ss out of U and ME :D ).

Bottom line here is to trade the pattern, and don't let the pattern trade you.

Fib

PS - I'm watching natural gas and crude oil markets very closely as gold usually has a leading affect in this area by about 10 months. If this is the case, the energy sector could be in for a nice uptrend near term. I will make a post on this on the FF board when warranted - but knowing that you like to watch this sector - I thought I would make comment on it.

Better to ignore me than abhor me.

“Wise men don't need advice. Fools won't take it” - Benjamin Franklin

 

"Beware of false knowledge; it is more dangerous than ignorance" - George Bernard Shaw

 

Demagogue: A leader who makes use of popular prejudices, false claims and promises in order to gain power.

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#5 dougie

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Posted 05 December 2003 - 06:04 PM

FWIW:
from stockcharts:
# Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.
# Cup: The cup should be "U" shaped and resemble a bowl or rounding bottom. A "V" shaped bottom would be considered too sharp of a reversal to qualify. The softer "U" shape ensures that the cup is a consolidation pattern with valid support at the bottom of the "U". The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.
# Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which is conforms with Dow Theory.
# Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement is, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.
# Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.
# Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.
# Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.
http://stockcharts.c.../cupHandle.html

#6 uncleharley

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Posted 06 December 2003 - 12:06 PM

Thanks guys, for the lessons. I am finding these cup & handle formations and rounded bottom formations on a number of gold mine stock charts and as well as precious metals bullion charts. Crude oil charts have a 3 yr cup formation with what looks like a busted handle. We'll see what happens with that. My understanding is that if we get some consolidation on gold & then a positive breakout, we should have a run to $550.00 or so..... :rolleyes: