What is next for Gold?
A long term technical analysis of the daily, weekly and monthly charts for Gold

Erich K. Soltes
Oct 17, 2005

Below is an explanation of varies technical indicators that make up the Alpha Trend System.

In the lower window of the chart you will see the following indicators.

The main trend line for a security is the Alpha Trend this is denoted by the bold red line.

It is from this trend line that all other support/resistance lines are developed. The Alpha Trend is an adaptive moving average that uses proprietary mathematical formulas to create the base line movement of the selected security. From the Alpha Trend I then created three separate progression/regression price areas using Fibonacci ratios, which I call the 1st Alpha waves, 2nd Alpha waves and 3rd Alpha waves. It is these three wave areas that define the vast majority of a security's price movement. Moving out from the Alpha Trend, the 1st Alpha waves are denoted by the dark blue lines. This is the price range that a security will normally move to once the price of the Alpha Trend line is crossed in either direction. Next are the 2nd Alpha waves which are denoted by the light blue lines. It is this area between the 2nd Alpha waves where 79.82% of the time a security's price will remain. Last are the 3rd Alpha waves which are denoted by the violet lines. Once a security's price reaches this area it is in an extreme overbought/oversold condition. A security can stay in this area for awhile, but this usually represents a poor price in which to place a trade in the prevailing trend.

The next three moving averages are the one year moving average of the Alpha Trend denoted by the bold violet line, the five year moving average of the Alpha Trend denoted by the bold green line, and the ten year moving average of the Alpha Trend denoted by the bold black line. Each of these moving averages is set for the different time frames of a chart. On the daily chart the one year moving is 240 days, the five year is 1200 days and the ten year is 2400 days. On the weekly charts the one year moving average is 52 weeks, the five year moving average is 260 weeks and the ten year moving average is 520 weeks. Lastly, for the monthly charts the one year moving average is 12 months, the five year moving average is 60 months and the ten year moving average is 120 months.

In the upper window is my own relative strength indicator denoted by the bold blue line. This indicator measure the strength of the trend, "0" is overbought and "-100" is oversold. This indicator measures the strength of the price movement between the 3rd Alpha waves.

Above is the daily chart for Gold.

The current position for gold is short. The current sell price is $467.11. The Current trend is bullish. The Alpha Trend is trending up. Today's closing price is 0.58 percent to the support price of Alpha Trend. The Alpha Trend Support price is $466.47.

The one year moving average of the Alpha Trend is trending up. Today's closing price is 8.27 percent to the support price of the one year moving average of the Alpha Trend.

The one year moving average of the Alpha Trend Support price is $433.34. The relative strength indicator is trending down. Gold is moving down from an extreme over brought condition, the relative strength indicator had been above zero which is a very over brought area. Gold is currently only 0.58% from the Alpha Trend line which has held since August 31, 2005. If Gold can not hold above the Alpha Trend support price we should see a fall to the lower 1st Alpha wave band support price of $460.46. On the daily chart gold has had a great run from the end of August; the best thing for gold at this point is to start building a new base around the Alpha Trend line and the lower 1st Alpha wave band. Since February of this year Gold has been pulling back to only the lower 1st Alpha wave band then rallying to new highs. The only concern I have is if Gold falls below the bottom 3rd Alpha wave price of $454.44 level and the relative strength indicator does not turn up we could see a major drop in Gold to the one year moving average of the Alpha Trend currently at $433.34.

The current weekly position for Gold is long. The current sell price is 478.3150. The Current trend is bullish. The Alpha Trend is trending up. Today's closing price is 7.4297 percent to the support price of Alpha Trend. The Alpha Trend Support price is 436.7506.

The one year moving average of the Alpha Trend is trending up. Today's closing price is 10.2719 percent to the support price of the one year moving average of the Alpha Trend.

The one year moving average of the Alpha Trend Support price is 425.4938. The relative strength indicator is trending up. The weekly chart of Gold is very interesting in that it is saying that this bull market that began in mid July still has some strength to it. The relative strength indicator is stilling moving higher however its rise has slowed. Also, Gold's low for the week pulled back to within ten cents of the shorter term Alpha trend support price of $467.10, then rallied back up again. Gold has been holding around the upper 2nd Alpha wave band. For this to be a mid term top in Gold the relative strength indicator will have to turn down and we will need to see a break below the upper 1st Alpha wave band of price of $459.24. Until this occurs Gold should hold in this price area or advance towards the upper 3rd Alpha wave price of $487.

Above is the monthly chart for Gold.

The current trend is bullish. The Alpha Trend is trending up. Today's closing price is 12.1338 percent to the support price of Alpha Trend. The Alpha Trend Support price is 418.4286. The one year moving average of the Alpha Trend is trending up.

Today's closing price is 16.9919 percent to the support price of the one year moving average of the Alpha Trend. The one year moving average of the Alpha Trend Support price is 401.0534. The relative strength indicator is trending up. The monthly chart is pointing to a continuing rise in Gold. This current bull market, which started in December, 2001, is not showing any signs that it is over. The relative strength indicator has moved above its previous reversal price level set back in February of this year. This coupled with the fact that Gold has held around the upper 1st Alpha wave band, is pointing to rise in Gold to the next resistance price area of $493 an ounce.

In conclusion the daily chart for Gold is showing weakness with a pullback to the price area of $460.46-$466.47 range. If Gold can hold this price and rally the weekly resistance price area of $487 is the next major huddle Gold needs to get above. Even if Gold does pullback to the next major support price range of $433- $436 this would represent an excellent opportunity to get back into Gold for the next rise.

Oct 15, 2005
Erich K. Soltes
Alpha Trend Analysis

email: erich@alphatrendanalysis.com
Alpha Trend Analysis

About Erich Soltes

A graduate of Brookfield High School in Brookfield CT and an Eagle Scout, Erich went on to graduate from SUNY Maritime College in New York City in 1988, with a BS in Marine Transportation and a minor in Economics. For the next ten years he was a Navel Reserve officer and a Merchant Marine officer. In 1998 he went to work on Wall Street obtaining his series 7, 63 and 65 licenses. He worked both as a stockbroker and a financial planner helping clients obtain their financial goals. In 2004 he was able to finally reach his goal of developing a mathematical trading model that could beat the "buy and hold" method of investing. In mid 2005 the Alpha Trend Analysis website was created.

For more information on the Alpha Trend System and the daily newsletter please go to alphatrendanalysis.com.

DISCLOSURE: Erich K. Soltes is the Owner of Alpha Trend Analysis, which contains the opinions of E. K. Soltes, and is provided for informational purposes only. Neither Erich Soltes nor Alpha Trend Analysis, provide individual investment advice and will not advise you personally concerning the nature, potential, or value of any particular stock or investment strategy. To the extent that any of the information contained in this article may be deemed investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Past results of Alpha Trend Analysis, or E. K. Soltes are not necessarily indicative of future performance. Erich Soltes, entities that he controls, family, and associates, may have positions in securities mentioned in this article and may close them at any time.

Alpha Trend Analysis does not represent the accuracy, nor does it warranty the accuracy, completeness or timeliness of the statements made on its web site or in its email alerts. The information provided should therefore be used as a basis for continued, independent research into a security referenced in this article so that the Subscriber forms his or her own opinion regarding any investment in a security mentioned in it. The Subscriber therefore agrees that he or she alone bears complete responsibility for his or her own investment research and decisions. We are not and do not represent ourselves to be a registered investment adviser, or advisory firm or company. You should consult a qualified financial advisor or broker before making any investment decision and to help you evaluate any information you may receive from this article.

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