GOLD Analysis / Logarithmic Resistance??
Hello everyone and welcome.
The goal of this post is to ascertain the significance of the logarithmic chart in terms of historical trend lines and Technical Analysis.
Investopedia describes the logarithmic price scale as the "price spacing on the vertical or y-axis dependent on the percentage of change in the underlying asset's price". Makes sense. So what significance could Logarithmic trend lines hold?
In this long-term analysis I'll point out other indicators that are potentially telling a similar story to that of the logarithmic chart.
Gold Logarithmic Chart Analysis
As you can see in this monthly logarithmic chart, there are two yellow trend lines. The first trend line is a straight line connecting the low from 2001 and the high from 2011, which signifies the end of the 10 year bull market. The Second trend line is an exact copy of the first. I have simply copied the trend line and dragged it to the new low, allowing the logarithmic scale to automatically adjust the line.
As you can see from the first yellow trend line (far left), the highs of the 2001-2011 bull market never found support above this line. Now look at the second yellow trend line and where price action is at this very moment.
The green levels indicated on the RSI are what I believe to be a representation of trader sentiment in the market. A quick break down:
Above 75 - FOMO/Bull market
Between 59 and 75 - Bull market
Between 45 and 59 - Consolidation
Below 45 - Bear market
Now considering that the monthly RSI is coming into contact with the 75 line for the first time in over six years, it could be be signifying the momentary end of this bull run, if indeed this line does turn out to be resistance. If we go through it, my guess is the FOMOers are entering the market and we won't be up there for long.
Another potential indicator for a pullback could be the monthly Stochastic RSI, which rarely holds above 95 for long.
With those bearish comments out of the way, a full disclosure, I am currently holding Gold and Silver, and after typing the information above ( and getting my thoughts straight ) I may look to accumulate more on an RSI bounce around the 59 level (signified by the green arrow on the RSI).
The other green arrows represent good time to enter the market or accumulate more gold. The red arrow potentially a good time to short.
Thanks for reading. Please leave a comment on your thoughts. I'm especially excited for someone to take me and us to school on the logarithmic chart analysis.
Regards and goodbye.
The goal of this post is to ascertain the significance of the logarithmic chart in terms of historical trend lines and Technical Analysis.
Investopedia describes the logarithmic price scale as the "price spacing on the vertical or y-axis dependent on the percentage of change in the underlying asset's price". Makes sense. So what significance could Logarithmic trend lines hold?
In this long-term analysis I'll point out other indicators that are potentially telling a similar story to that of the logarithmic chart.
Gold Logarithmic Chart Analysis
As you can see in this monthly logarithmic chart, there are two yellow trend lines. The first trend line is a straight line connecting the low from 2001 and the high from 2011, which signifies the end of the 10 year bull market. The Second trend line is an exact copy of the first. I have simply copied the trend line and dragged it to the new low, allowing the logarithmic scale to automatically adjust the line.
As you can see from the first yellow trend line (far left), the highs of the 2001-2011 bull market never found support above this line. Now look at the second yellow trend line and where price action is at this very moment.
The green levels indicated on the RSI are what I believe to be a representation of trader sentiment in the market. A quick break down:
Above 75 - FOMO/Bull market
Between 59 and 75 - Bull market
Between 45 and 59 - Consolidation
Below 45 - Bear market
Now considering that the monthly RSI is coming into contact with the 75 line for the first time in over six years, it could be be signifying the momentary end of this bull run, if indeed this line does turn out to be resistance. If we go through it, my guess is the FOMOers are entering the market and we won't be up there for long.
Another potential indicator for a pullback could be the monthly Stochastic RSI, which rarely holds above 95 for long.
With those bearish comments out of the way, a full disclosure, I am currently holding Gold and Silver, and after typing the information above ( and getting my thoughts straight ) I may look to accumulate more on an RSI bounce around the 59 level (signified by the green arrow on the RSI).
The other green arrows represent good time to enter the market or accumulate more gold. The red arrow potentially a good time to short.
Thanks for reading. Please leave a comment on your thoughts. I'm especially excited for someone to take me and us to school on the logarithmic chart analysis.
Regards and goodbye.
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