Saturday, May 24, 2008

Crude Oil, Gold and Pitchforks

3 year chart of the ratio between Crude Oil and Gold. The suggestion that a drop in crude oil means a fall in the commodity complex, and specifically in gold is only true some of the time. This chart would be much flatter if oil and gold moved in lockstep. Gold may face weakness should crude oil correct, but the price fall relative to crude oil may differ drastically just as gold appreciation failed to keep up to oil the past 2 months.

I was exploring the use of Stockcharts pitchfork tool and noticed some interesting pivot points on a 1 year chart. This was more of an experimental chart but interesting to TA folk either way no?


Jesse said...

I have a comment/question about the GLD chart you posted a few days ago. Today, on "goldseek".com there is an article by Douglas Gnazzo where he also mentions the divergence of the RSI making a new high while the price doesn't. However, he refers to it as negative and therefore I believe a bearish signal. Reading stockcharts chart school seems like your analysis is correct. It is a little confusing though and I am wondering if Gnazzo made a mistake or if I am missing something. Any Thoughts?

Jesse said...

Another question for you. Howard Katz points out in his article today on Kitco that the $HUI just made a "gravestone candle" a few days ago. This is typically a trend reversal candle but requires confirmation. From what I can tell gap down the next day is one possible confirmation. I don't quite see that but 2 down days have followed. Just wondering if you have experience and thoughts on this chart pattern. TIA

J said...

i dont analyse candle formations,
but does confirm that positive divergence occurs when the signal such as an RSI registers a higher high while the price action was lower than the previous peak.