DAX and gold: Which position should you take?

Both currently present interesting potentials. Our chartist sees if you should go long or short.

If our suspicion of major markets is actually showing some strength and proves to be correct, logically gold should experience some contrary movement.

For today, we're taking a big picture update on gold and the DAX. When viewed together, they present an interesting potential.

Our most recent review against the DAX presented an initial target of 13,240. Secondary, if bettered, was up at 13,652 points. This has changed.

The index indeed achieved our primary target level, exceeding it quite nicely for a few sessions and has spent the last couple of weeks oscillating above and below our 13,240.

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We're now able to update this index's potentials, should it opt to break free of the current hiatus. Apparently, movement now above 13,340 should attempt further growth to an initial 13,489 points.

If exceeded, secondary now calculates at 14,561, a new all-time high and a point at which we'd expect some pretty serious turbulence.

For it all to go wrong against the DAX, the index now needs to fall below 12,450 points.

Visually, there appears little danger of this, the most imminent tripwire being the potential of weakness below 12,900 triggering reversal to 12,554 points.

Source: Trends and Targets      Past performance is not a guide to future performance

Gold was last reviewed three weeks ago and little has changed.

Overall, we still suspect it intends $1,602 on the current cycle, once some immediate amateur dramatics complete.

It continues to appear that the price of gold intends some near-term weakness, with the result travelling now below $1,440 and calculates with $1,416 as a point at which we'd hope for a rebound. If broken, the price almost must bounce at $1,389.

What interests us from these drop potentials is a simple question.

If gold does indeed reverse, will the price achieving $1,416 happen around the same time that the DAX (for instance) reaches 13,489 points.

Such a correlation of markets would prove fascinating with one suggesting a short position (and crossed fingers) while the other will want a long position (and a lucky rabbit's foot).

It's the festive season, we can dream!

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.