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Chart Advisor: This is Gold!

Chart Advisor: This is Gold!

Posted September 12, 2024 at 10:38 am
Investopedia

By Jay A. Petit, CMT

1/ This is Gold!

2/ Treasury's Next Target

3/ EM Bond Re-emerge

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1/

This is Gold!

After a 10-year uptrend, with interim pullbacks, Gold spent the next 9 years digesting this rise through a consolidation, creating a basing pattern. Thereafter, the price went on a sideways drift for close to 4 years, making higher highs and lower lows, producing a broadening formation also known as megaphone. Six months ago, Gold broke out, confirmed by the RSI going into overbought territory, which is evidence of strong buying interest.

Past performance is not indicative of future results

2/

Treasury's Next Target

On this weekly chart, we can see how the iShares 20+ Year Treasury Bond ETF ($TLT) is in a slow process of turning around.

While the price low in October 2023 is lower than its previous low (October 2022), the RSI made a higher low, creating a bullish divergence.

The next price low, in April 2024, made a higher low compared to its previous low, the RSI alleviated from oversold levels, suggesting the selling is abating, which is technically a constructive sign for the Treasury ETF.

Past performance is not indicative of future results

$TLT’s price action since mid-2022 produced an inverted head & shoulder pattern.

3/

EM Bond Re-emerge

The iShares J.P.Morgan USD Emerging Markets Bond ETF ($EMB) has been in a price recovery mode since its October 2022 low. The price action making higher lows is technically constructive. To help identify important technical levels of support and resistance, Technical Analysts frequently use the Fibonacci retracements. These retracement levels are arrived at by first measuring a complete trend, in this case the January 2021 to October 2022 decline. These calculated levels then act as resistance on the way up and once the price surpasses them, they then act as support levels.

Past performance is not indicative of future results

Three weeks ago, the price was able to lift above its 38.2% retracement level, which is another positive technical input in the price chart, as the breakout suggests that the ETF could rally back to the 61.8% Fibonacci retracement, just above $100, notwithstanding interim pullbacks.

Originally posted 12 September 2024

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