Gold made a strong bullish statement today. If the week closes like this or higher, it would mean a rally to ATH has begun. Let’s explore the hypothesis from different angles.
Gold strongly broke above the inflection area of $1810-1815. The next test – daily 200 MA. The indicators seem to be recovering and even the weekly ones show the signs of bullishness.
Two concerns I have:
– the structure of the wave off the low. I am struggling to find a reasonable motive sub-waves to support the rally;
– the speed of recovery. In the last four weeks the price is barely above the middle point of the huge red candle.
Definitely need to see how this week closes. The next two days could be full of surprises, including the unpleasant ones.
If this week closes $1820 or higher, the rally is likely underway. Below that would mean that gold is not yet out of the woods.
From the Weekly Analysis:
“The Candles Theory would allow 1-3 more green days before a sharp reversal. We will see how this rule plays and whether the weekly/monthly bearish pressure materializes in the second part of the week.” So far we had 2.
Remember that gold was damaged greatly in June on the monthly and weekly frames. The long-term odds are still on the dark side.
From the weekly forecast: “Gold could continue the rally in the beginning of the week and is expected to reverse in the second part. The $1810-1815 became the inflection area. So far, the price was rejected three times from there.“
“If this week closes above ~$1815-1820, this could be a first sign of the longer rally.
For a confirmed rally, we should see the bullish signs at least on the weekly charts.“
On the side note, GDX closed today as if it is ready to fall sharply tomorrow. Usually GDX and gold are closely correlated. Could this time be different?
The longer term forecast and targets were discussed in details in the Monthly Analysis (link below).
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Previous Weekly Analysis:
Previous Monthly Analysis: