This post was just published on ZYX Buy Change
As we told you yesterday early morning, the momo crowd was aggressively buying gold and silver. The buying continued throughout the day and is continuing this morning.
The momo crowd is advancing double bottom in gold as the reason for buying. Take a look at the chart:
We labeled the double bottom as ‘FALSE DOUBLE BOTTOM’.
The alleged double bottom is shown on a 15 minute chart. Back testing shows that when the two bottoms are very close to each other on a 15 minute chart, statistically based on history the pattern is correct less than 50% of the time in predicting a sustained up move.
As expected the momo crowd is not into rigorous testing, for the momo crowd it is all about buying bold and silver on the good news and conspiracy theories.
Even those without the wear-with-all to back test can refer to Technical Analysis of Stock Trends by Edwards and Magee, widely regarded as the bible of technical analysis. The alleged bottom does not meet the criteria of traditional technical analysis.
Our short-term rating on gold and silver is neutral with no bias.