This was my take on it...I was also warning people that a correction gold was imminent and the USD would strengthen...Here is the link to the post charts and all...27th November
Gold extreme overbought
My indicator had turned down before gold turned down as it is a study based on volume...as I have mentioned before volume comes first then price, not the other way around.
Here is a quote from that post...
".Anyway here is a chart with the longer term analysis of gold, I also have a shorter term indicator...It has been turning down the last couple of days even as gold as been moving up which in my interpretation means the rally will turn, and at worst gold could spike up again before a turn, and it is showing extreme signs of overbought conditions in gold..."
I had marked on the chart Turning Down?
Gold was at 1196 at time of post and I said as highlighed above that at worst gold could spike up again before a turn of course which it did to 1226USD...
It has seemed to me that the anytime the chance of a gold correction was mentioned or a USD rally, it was heresy...I own gold. But it doesnt mean I can hedge the volatility with going long USD or shorting silver as I have done, and covered with a 6.52% return with leverage in a couple of days...Also I have been short AUDUSD and GBPJPY...
Anyway here is the follow up...Shorter term buying waned....Distribution picked up in earnest from the 26/11/2009...With the accounts of the hedge fund boys selling I knew this was proper selling....In the space of a week aggregate shortterm volume has went from 90% buy to 40% buyers....hence the swift move down...
Here is the longer term version...Still sky high (but flattening) although buyers have come down from 76% to 70%...This is not used so much as a timing tool...but it is a warning that gold could correct more than anyone thinks, or at least more than the gold bugs think (which was only 7% or some other silly number)I m not saying this will happen, but just dont be surprised if it does. In this chart of the sell volume starts to pick up this market could make its way down...failing that, if buy volume drops and sell volume stays constant it will still fall in the end...or both could rise together, in which case the 50% line will be important... In this case shorter indicators will be needed to draw conclusions...