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To: ms.smartest.person who wrote (680)	2/3/2006 11:57:56 AM
From: ms.smartest.person	Respond to of 3198

Gold at $665: The chartist view Colin Abrams Posted: Fri, 03 Feb 2006 [miningmx.com] -- GOLD shares have been the leading stock group on the JSE over the past six months. To ascertain whether the current run in gold shares will continue or not, we look at a chart of the gold price itself (in US dollars). An interesting development has recently occurred there. We also look at a chart of the JSE gold index, which is pointing to a clear target. Miningmx exclusive: win one of ten copies of Gold in South Africa by clicking here The charts show that the gold price will continue rallying in the months ahead. The JSE gold index is also pointing to a larger upside target. That fact that both these important charts are confirming each other is very good news for South African gold shares, which were first recommended in this column five months ago, and are still bullish. Please note: For more recommendations and charts by the author on SA and overseas stocks, indices, and currencies, please go to www.themarket.co.za.p> GOLD PRICE ($) – bullish breakout Trend: Up, although overbought. Strategy: Buy a pullback towards $550. Chart 1. (Weekly) miningmx.com About two weeks ago, the dollar gold price broke out of a multi-year rising channel (lines 1 and 2), to the upside. This breakout is pointing to more rallying to come over the next 6-12 months+. #The weekly Relative Strength Index (RSI, on top) is overbought, which implies there will be a correction soon. #Use a correction towards line 2 ($550, on the spot price) to buy. Long-term payers can simply hold until the target is eventually reached, but traders should look to scale in an out of short-term pullbacks until the upside target is reached. #The upside target is $665, which is measured as the height of the channel projected up. Short-term support for the gold price is line 2 at $550. When buying on a pullback towards $550, place your initial stop-loss as a daily closing price below $545.00. Medium-term support is line 3, which is at $530 for this week, and rising at an angle of $6 per week hereafter. JSE GOLD INDEX – higher targets Trend: Up. Strategy: Investors keep holding gold stocks. Traders keep buying on pullbacks. Chart 2. (Weekly) miningmx.com #In September last year, the JSE Gold Index broke out above line 2 of a three-year downtrend, in the form of a falling wedge (lines 1 and 2). The minimum upside target from this pattern is 3550 on the gold index (measured as the height of the wedge projected up). The price is currently galloping towards that target. #One word of caution is that the weekly Relative Strength Index (RSI, on top) is clearly overbought, which implies that a pullback can occur at any time. #Any pullback towards the 2900 level should be used by traders to buy. Medium/longer term support is now line 3, which is at the 2700 level). As long as the price remains above there, longer term players should continue to hold gold shares. #Once the 3550 minimum target is eventually reached, expect the all time high of 3739 (from May 2002) to be tested. There will naturally be pullbacks along the way. This article is a printout from Miningmx.com Copyright © 2004 miningmx.com