Can we predict peaks/bottoms using Gold/Nifty ratio chart?
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was going through some charts on gold/equity relationship.. See the Gold/Nifty weekly chart where I have marked the approx peaks and bottoms . An interesting observation (not mine) i read on the net where they say when Gold price/Nifty value goes below 3 . Equities are at the peak in that period and when it goes higher than 4 then equities/nifty at bottom . So i have put out both Gold/Nifty ratio chart and Nifty chart marking by circle(in nifty chart) and by vertical lines on both where peaks and bottoms occurred.
No as we see equity going higher and higher what remains to be seen when there is a correction (real one) in near future , will the graph of gold/nifty go below 3? or other way round keep a watch when this touches the "equity bottom zone" and then become extremely cautious?
Agreed gold or dollar strength is just one of the many factors but still this graph could be a pointer i feel
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money flows out of equity into gold, so gold will show the top or bottom after a while when equity has topped/bottomed. comparison of Nifty and mcxgold chart shows this clearly. gold price is above covid high and after Nifty corrects will go higher.
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your observation of comparing nifty with ratio chart of gold/nifty is correct and corroborated on chart. Please observe the marked circles with reference to the parallel channels drawn on 30 min time frame. when the lower ratio chart is at top of channel nifty is at bottom and vise versa. so if ratio is at top nifty is at bottom and will make new high in near term.
