Spot gold has fallen below the 200-day simple moving average again and formed a death cross, a technical sell sign, for the second time in less than four months. More information about Mcx Commodity intraday tips visit the site mcx-today.blogspot.com
This could be a more reliable sell signal than the death cross that appeared in mid December and point to a bearish 2012-2013 for the MCX Commodity market because a repeat death cross can indicate that the market is ready for a sharp correction.
After the first death cross, the MCX gold market dropped a little before recovering quickly.
Increasing the chance of a sharp fall is another kind of death cross, which was made by the 22-day MA falling below the 200-day MA.
To be sure, the recent failures of MA signals work against the theory that the market should fall after a death cross or rise after a golden cross.
While the current death cross is the second such signal in four months, the market has failed to show a clear, sustained movement. MA works best when the market trend is strong, as it was between January 24, 2009 and December 12, 2011.
The 200-day MA worked well for gold during this period as the price never dropped below the MA. Investors could have maximised profits by holding a long position following the formation of a golden cross in January 2009 until the end of the period.
When the market moves sideways, the MA can fail, such as in the periods of September 5, 1990 to March 9, 1993 and September 9, 1993 to November 28, 1995, when many false signals were generated.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **
This could be a more reliable sell signal than the death cross that appeared in mid December and point to a bearish 2012-2013 for the MCX Commodity market because a repeat death cross can indicate that the market is ready for a sharp correction.
After the first death cross, the MCX gold market dropped a little before recovering quickly.
Increasing the chance of a sharp fall is another kind of death cross, which was made by the 22-day MA falling below the 200-day MA.
To be sure, the recent failures of MA signals work against the theory that the market should fall after a death cross or rise after a golden cross.
While the current death cross is the second such signal in four months, the market has failed to show a clear, sustained movement. MA works best when the market trend is strong, as it was between January 24, 2009 and December 12, 2011.
The 200-day MA worked well for gold during this period as the price never dropped below the MA. Investors could have maximised profits by holding a long position following the formation of a golden cross in January 2009 until the end of the period.
When the market moves sideways, the MA can fail, such as in the periods of September 5, 1990 to March 9, 1993 and September 9, 1993 to November 28, 1995, when many false signals were generated.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **
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