Adapted for every market and their tendency.
For example, for HUI and XAU, I find that stochastic and the mobile averages are very effective tools to indicate the zones of purchase and sale. The use of a graph monthly does not allow to be very precise short-term but it gives the big tendencies of purchase and sale.
The tendency of the HUI before 2001 is for the decline, after 2001 the tendency becomes bullish, nevertheless the same tools of analysis can be used.
1) Stochastic: before 2001, they stay below 50, on the other hand after them always live above 50. Stochastic is at the moment in the zone of 50 what indicates a possible bounce in the next weeks.
2) The mobile average in 9 monthly (150-200jours +/-) before 2001 was always above the rates, after 2001, it is always below the HUI. Before 2001 the link with the mobile average was an indicator of decline, today it is the opposite. When the HUI gets closer to its mobile average, it is a signal of purchase.
3) If all this changed, it would
be a sign of change of tendency long term, but I do not believe in this
1) By using stochastic and mobile average in 9 monthly with the XAU, we arrive at the same conclusions.
We can qualify all the same because the same right-hand side serves as resistance and as support since 1996, but this right-hand side is tilted. The XAU approaches this zone of bounce.
The mobile average serves too as support but in a more supple way. The XAU has an increase which is much less dynamic than the HUI.
2) The RSI is always below 50 before 2001 and later it is always above. The RSI gets closer to its zone of bounce 50.
3) But, the XAU has a peculiarity
with regard to the HUI, it is the presence of a head shoulders inverted.
It is for me the most effective figure of the technical analysis.
At the moment, the XAU returns on its line of neck and should bounce on this zone. The objective then is 140.
This approach of stochastic and mobile average in 9 monthly worked always until today. If stochastic passes below 50 and what the HUI or the XAU crosses below their mobile average, it would be very bad sign, it would indicate, indeed, a change of tendency. It is necessary to watch particularly 90 points on the XAU which is a very important point because it is its line of neck.
Dr Thomas Chaize