Is it just me, or is gold completing a somewhat extended cup with handle on the 1 year chart?
Let's see: http://www.kitco.com/charts/popup/au0365nyb.html
Okay. Hmm. If I flip it upside down, I also sort of see a head and shoulders thing. Running from 30 Jan 03 to 13 Mar 03 is a shoulder, then the head is from 13 Mar to 22 May 03, and then another shoulder. Yeah, sort of a hunchback image.
So, tell us, oh technical analysis believers, when you see these things in the charts, what does it mean? I wonder if it isn't very much like looking at the clouds and saying, "that one looks like a bunny," and "that one looks like a doggie," and "over there, just above that big city, that looks very much like a giant mushroom...oh, dear." <grin>
But, there are cups, cups with handles, pennants, head and shoulders, inverted head and shoulders, cups of Head and Shoulders (R) shampoo? What does it all mean?
I'll tell you what it means. In the very short term, gold is going to either increase or decrease in price. Over the medium term, while gold goes up and down in price, it will form a trend which is either upward or downward. Over the long term, while gold is going up and down along that trend line, it may also be going up over a much longer trend, but not straight up just yet. How's that? Irrefutable.
Another thing that drives me to distraction is this whole problem of how the shapes change depending on how far away you stand when you look. You want to stand where you can see the last year. But, that's totally arbitrary. Why not stand back a bit further and look at ten years?
http://www.kitco.com/charts/popup/au3650nyb.html
On this scale, the last year is a sort of fuzzy bit of noise going on over at the right edge of what appears to be a much bigger cup or bowl. From 1 Aug 96 to present gold forms a nice big bowl, and has not quite gotten its right lip up to where the left lip was back then. Meanwhile, the bowl you are seeing on the 1 year view is compressed into a few jaggy lines.
In fact, the bowl you see, when examined on the 10 year view, looks a lot like the very jaggy spike which shows up just after 1 Aug 99 on the ten year chart. And, to my way of thinking, that spike looks really odd, sort of manipulative.
If you agree with the analysts who claim that a lot of gold is being used by central bankers and bullion bankers to manipulate prices through all kinds of shenanigans some few of which are complained of at http://www.savegold.com/ then what you see as a cup might be one of the last gasps of the current "gold pool." As you recall, the gold pool from roughly 1964 to 1974 utterly failed in managing the price of gold. After this attempt was crushed by the market, gold soared to $895 or so intra-day. Amazing stuff.
But, to get back to my question, if you see a little cup with a handle (here is my handle, here is my spout...) what does that mean? Does it mean that our cup runneth over?
Regards,
Jim http://www.ezez.com/
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