Parabolic Gold Update #1

Gold has been shooting straight up since I brought up the subject last week. But will it keep going? I reckon it’s time to dust off the old Fractal Dimension Index (FDI); don’t you agree? Here is a weekly GLD chart (click to enlarge):

Parabolic Gold Update 1

The FDI is in the red line in the lower panel. When it drops down to the purple line, that means that prices have been moving in a straight line, which our allegedly fractal markets are not supposed to do. And sure enough, low FDI readings have corresponded to peaks on the GLD chart. (Points 1, 2, 3, 5, 6). And, as you can see at point X, the FDI is very low right now.

However, that does not mean that gold will take a plunge. It might, or it might just pull back a bit and gun higher as it did at points 1, 2, and 5. A low FDI reading only tells you that the trend is long in the tooth. It doesn’t tell you what will happen next.

Now look at points 4 and 7. A high FDI reading means that prices have been consolidating and that a breakout may be imminent. Not bad, huh?

Note: I will write more about the FDI as soon as I’m done coding it. I just have to add the alarms now.

6 thoughts on “Parabolic Gold Update #1

  1. Remember K, there was an auction today, so price action wasn’t driven by market forces (bid/ask), it was driven by broker-dealers doing the bidding of the Government. 😉

    Matt, interesting chart. Given the history of multiple trips to the lower FDI line, perhaps that is what will happen this time as well. We’ll do a little sideways consolidation and then run up to Daneric’s $1300 target level with another hit to the lower FDI line. Then gold will do a little correction? thanks for the info, as usual.

  2. No problem K. I try to help where I can. Can we make this H&S on S&P, NDX, RUT, etc… hold up please? Thanks.

    Try this site on for size…I’m sure you will sign up and become a follower. There is a “financial” show on the AM dial in PHX when I head home. Very interesting guy, and he always interviews someone at 5:30. Today, he interviewed Britt Beemer (retail specialist and pollster). He wasn’t very bullish on Christmas sales. While I can’t get what he said today on this blog, I can post his past comments:

    http://www.rtoonline.com/Content/Article/sep09/beemer-predicts-retail-train-wreck-091809.asp

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