Week 20 (17th May-23rd May): Weekly Moo River Watch on Wealth (gold)

Gold (SPOT)

(based on 30 year advanced data charts)

Yearly

If you look at the yearly chart, you would say to yourself how you missed this glistening run for the past decade and you would wonder whether it is too late to join in the bull run.

To date, on the yearly, there is no sign that this bull run has ended, as we have made another higher high this year and so far the low is a higher low against last year's as well. All the candles are green, supported by green para sar dots.

However, yearly rsi has been stuck above 70 since 2006 and you would imagine when it does come down 70, it will alert many long term bears.

Quarterly

Things are not so right for aggressive bulls (those who buy on dips and dives to build up a large gold long position, without ever taking profit, following a superbull market strategy which has served them very well indeed).

There appear three red para sar dots and a few of the momentum indicators are pointing downwards.

Price chart: We have had a rare or first 350 pointer pullback, which is alarming. In a superbull run, nobody gets off the bus, or the next stop will be higher as has been the case for the past decade. Is this just a pause in the superbull run or the end? That is the billion dollar question.

The answer lies in the chart pattern of this top, whether it is a reversal pattern or a continuation pattern, at the moment, it appears more like a reversal pattern to my eyes.

And the answer also lies in the upstream moo river on RSI, as it has topped out at 89 and is now on its way to its lowerbank near 70ish, a breakdown through will set bears pulse racing wildly.

Certainly, the other momentum indicators are pointing to a waning bullish momentum at least.

We are undecided here on quarterly.


Monthly

There is always a debate about the relationship between the past and the future, which one determines which. In term of the science of the human gene, a lot of what we do in life is actually predetermined by our historical gene. In term of sociology, it is our interaction with the environment (social environment) that enables us to adapt, change and behave in the way we do. So here we have this paradox between monthly and more longer-term charts, does the monthly determine the latter or does the latter prescribe the monthly?

Monthly rsi has already made up its mind. It has fallen through the long running upstream moo river in July 2008 and has now completed its first wave down and possibly the second wave pullback.

From here onwards, there are two possibilities:

1. This is an ABC corrective wave, so following another dive towards 655 dollars, the bull run will resume;

2. This is a 5 Wave impulsive wave in a complete reversal of the superbull run. Thus we will see a much deeper Wave 3 to come, followed by more falls towards levels unimginable by the aggressive bulls at the moment.

The problem is when it becomes crystal clear which one is which, it might already be too late for some investors.

Weekly

The downturn here is more obvious and more persistent as we have a clear downstream moo river on rsi. At the moment, we are crossing over from the lowerbank towards the upperbank, but other momentum indicators are more bearish than bullish, indicating a continuation of this downstream moo river. When it does go down, this time, it might reflect severely in terms of price, as bulls rush out of the exit en masse.

To me, from here onwards, all that glistens might not be the true gold.

Good luck.