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In a message dated 97-07-27 18:31:20 EDT, you write:
<<If you look at the XAU index(which usually preceedes Gold) you will find a
potential inverted Head&Shoulder forming. Break out point 97,63. Close Fri
95.15.
BUT if you look att On Balance Volume for XAU we have a completed Inverted
H&S (July 8-July25)..................>>
Stig,
Not sure I understand your time frame for this inverted "head and shoulders"
pattern. We may be talking about the same period, but the most obvious
inverted head and shoulders pattern I see, starts with the drop from 1987.
With XAU data from that period to the present on the screen, the left
shoulder, or is it the right shoulder when it's inverted, anyway, the first
shoulder is created at about the XAU 85 level between 1987 and 1989. The
"head" was the drop to 65, and the final shoulder started to form with the
drop from early 1996 down to the same XAU 85 level very recently.
The first shoulder bounced off XAU 85 for two years. We have just arrived at
the 85 area, so I'm not sure we can assume the second shoulder bounce off 85
several days ago can be argued to compled the end of the formation of this
last shoulder. Wouldn't you expect some vague similarity in time consumed by
each shoulder. I guess I'm suggesting that if this is an inverted head and
shoulders pattern, the ideal would see us bounce off XAU 85 for a bit longer
before making a prolonged move up.
As suggested in a previous post, and even if this is not the inverted
pattern, XAU 85 should be considered as resistance I would think. If
breached in a violent manner, I'd be a put buyer on the reaction bounce back
up toward XAU 85.
There goes another two cents,
Peter
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