{"id":46215,"date":"2018-04-17T08:00:07","date_gmt":"2018-04-17T12:00:07","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=46215"},"modified":"2018-04-16T23:07:42","modified_gmt":"2018-04-17T03:07:42","slug":"gold-update-old-gold","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2018\/04\/gold-update-old-gold\/","title":{"rendered":"Gold Update: Old Is \"Gold\"?"},"content":{"rendered":"

\"Aibek<\/a><\/p>\n


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Recently, I was looking for my school notes amongst my old stuff for my eldest daughter to help her understand chemistry as my school teacher was a real fanatic on this subject. During the process, I found many things with memories from my youth, and it prompted me to call my old friends and discuss those handwritten letters that we used to send by messenger. We couldn\u2019t have ever imagined that the digital era would come. <\/p>\n

Quite often things from the past can help us today. I decided to dig deep into the past on the gold chart to understand what is happening with our frozen gold market these days. Bingo! He who seeks shall find. <\/p>\n

Below is the chart with my annotations to illustrate the findings.<\/p>\n

Chart. Gold Quarterly (Logarithmic): This \u201cVinyl\u201d Could Play Again <\/h2>\n

\"Gold<\/a>
\nChart courtesy of stooq.com<\/em><\/small><\/p>\n

First of all, I would like you to pay attention to the word \u201cLogarithmic\u201d in the chart title, which is usually abbreviated as \u201cLog\u201d in the chart options. It means that the Y-axis of the chart has log scale, which is nonlinear and commonly used for the broad range of the data. <\/p>\n

Indeed, gold has the wide range of the price data as it was very volatile between really low digits above $200 per troy oz and the one thousand in the distant 80\u2019s. That\u2019s why the right step was to switch to the log chart, which I usually avoid for the short-term chart as linear scale gives more price accuracy when we build the trends. So what changed when I pushed the \u201clog\u201d button? You can see the outcome in the chart above; the old consolidation grew in size as before on linear scale it looked negligible as the lower numerical order digit on the linear range is very small.<\/p>\n

This approach lets me have a good look at the chart structure of the previous consolidation (blue box) as it now shows up like an elephant compared to the current consolidation (orange box). This finding gives us several clues for further market behavior. And I would like to start from the straight one. <\/p>\n

As I mentioned above, the current consolidation on the log scale looks much smaller than the earlier one. For me, it means that the next move up will be much smaller on the log chart and most probably it would finish the uptrend as the power of the trend would get exhausted based on the amplitude of today\u2019s consolidation. Again, the growth could be quite big on the linear scale in simple digits, but the growth structure will be relatively smaller than what we had before the current consolidation.<\/p>\n

Another discovery has yet to be proven by the time as we now have similarity between the first halves of both boxes. Let us go inch by inch. At the start of each box, we have a down-up-down zigzag, which brought prices down heavily from the tops. As it is a complex correction, then we should have a junction (counter-trend correction) between the two downside zigzags; it emerged in both boxes (green smile). I highlighted with the black down arrow our current position from the orange box in the blue box for you.<\/p>\n

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Do you think the consolidations look similar?<\/strong><\/p>