I received some very important alerts this afternoon. Gold triggered a new IT Trend Model BUY signal as the 20-EMA crossed above the 50-EMA. In addition, Gold also saw a new PMO BUY signal; and, like the SPX, a new Short-Term Trend Model (STTM) BUY signal was triggered as the 5-EMA crossed above the 20-EMA. STTM signals can whipsaw quite a bit, but they can clarify the significance of short-term breakouts or breakdowns. The new signals on Gold suggest some important areas of resistance could be broken this time around.
First let's look at the new STTM BUY signal on SPX. It is great to see that declining tops resistance held through the short-term correction last week. Price has now entered April's consolidation zone. We don't have a PMO BUY signal just yet, so I'm hesitant to say that all-time highs will be broken soon, but if the PMO can get back above its signal line, I would then look for new all-time highs.
The Gold chart is looking good. There is a very nice positive divergence between PMO and OBV tops and of course, the new PMO crossover BUY signal arrived as well. The loose rising trend channel is back in play as price recaptured support along the rising bottoms trendline and is holding onto it! Overhead resistance on the daily chart is the $1300 level, but the declining tops trendline could have a bigger impact.
There is an important overhead resistance test arriving around $1280. The green LT declining tops trendline on the daily and weekly charts has held as overhead resistance since its inception in 2012. Even if price can break above the declining tops trendline, horizontal resistance at $1300 could still pose a problem. Good news is that the 17-week EMA is hanging tough above the 43-week EMA and important $1200 horizontal support held. The weekly PMO rising again is a bonus as well.
Conclusion: The Dollar is struggling and that is helping Gold resume its rally. Last week saw a jump in the VIX and short-term corrections which will typically help Gold. These new signals could be representative of caution or concern with a bear market. However, with the SPX generating a new STTM BUY signal, new optimism may have arrived. If investors become less nervous, Gold could lose favor as it is widely considered a "safe haven" in rough markets.
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
