Our trusty counter-trend Indicator, the Gold ETF (Gold in Ozzie Dollars) had an interesting day today.It was down solidly in the first hour to break clearly below medium term support. It then rose to finish the day just above support.
The DMI and ADX (bottom pane on the chart above) clearly shows that the Gold ETF is in non-trending mode. The ADX (Average Directional Index) is close to the 10 level. Below 20 is considered to be non-trending. The DM+ and DM- are twined together - also indicative of a non-trending market.
When a non-trending stock gets to support, you can usually expect a bounce upwards to once again test resistance. Given that the Gold ETF broke below support on an intra-day basis and then climbed back up suggests that the next move will be up, not down.
Eventually, of course, these support and resistance levels fail and the stock changes from a non-trending to a trending mode.
The odds at this stage favour a bounce higher. And that should mean a fall in the general market.
Cheers
Red
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