The always informative Trader's Narrative blog had an interesting comment on the Sentiment in Gold which really got me thinking.....
"Gold Sentiment
Finally I wanted to add a tiny nugget to the exhaustive sentiment analysis of gold I wrote at the start of the week: the Daily Sentiment Index for gold has now spent more than 17 consecutive days above 90%.
A feat it only narrowly beat in 5 years ago when it spent 20 consecutive days, from early November to early December 2004, above 90%. It managed to create a top at $457 that lasted almost 10 months. And to think, back then it was only 12% above its long term moving average while now it is 23%."
And given my predilection for historical rhymes and the fact that I'm still struggling to reconcile a potential dollar strength/ temporary deflationary case with the developing relative strength in gold, I found this 2004 Rhyme more than revealing.
This potential roadmap align it all
- Sentiment Extreme in Gold
- Flow Extreme in Gold
- retest of the Triangle breakout in Gold
- steeper 2 months (+/-) correction in Gold
- relative strength in Gold sustains in the medium term
- breakdowns of key pillar of the recent rally (see here and here)
- 1 yr Dollar strength
- 1 yr deflationary tendencies for the entire Risk trade
This could be a high Probability Roadmap as long as we don't see major deviations.
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