I HAVE REVISITED HOW THE TRENDS APPEAR ON THE SENTIMENT INDICATOR.
As you may be aware, I use point and figure charting for technical analysis.
Here is the short term chart for SLR.
This chart is from March 2020 to yesterday.
As you can see, the short term trend held until it was broken in October 2020.
Then a down trend was established.
You can see how, on a rising trend, prices remain above the trend. The trend is support
In a falling trend, prices remain below the trend. The trend is resistance.
This is generally true till the trend changes.
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As I use a summary of hundreds of point and figure charts to create the sentiment indicator, how would the chart look if I use the same trend rules?
This is what it looks like and you can clearly see support and resistance.
There are 3 significant events but none had any influence in changing the trend.
The capitulation sell-off in Feb/March, 2020.
The bear trap just before the top of the trend.
The bull trap more recently before the bottom of the trend.
I expect to be able to recognise quite quickly a trend reversal as the new rising trend will act as support.
It is not perfect as many goldies are multi element. It is certainly good enough for our purposes.
Just so happens to produce nearly perfect 45 degree slopes as per the P&F charts.
We know the gold price topped in August, 2020. Stocks certainly appear to lead the gold price.
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