Wednesday, March 10, 2010
Decision Point for GOLD - Medium Term Outlook
I am using Wilder's ADX oscillator to evaluate the strength of the current trend. Notice that the ADX moving average is sloping downward within the medium term downtrend. This means that we are still currently in a corrective phase. In other words the trend is weak regardless of the trend's direction. Applying the basic principle of a trend in motion will stay in motion, odds favor that the outcome of the corrective period to be a resumption of the long term uptrend. The long term uptrend was confirmed with the early Feb bounce at 102.28. It appeared that there was a breakout of the medium term downtrend in late Feb. However, the ADX oscillator is not confirming. It looks like we have started a short term down trend and are still in consolidation mode within the context of a medium term down trend. This may have formed a new medium downtrend resistance line in RED. In my next post, I will take one more step back to get a bigger picture.