The weekly candle closed just 21 pips below 8w EMA and prevented a bullish 8/20 cross. You cannot make these numbers and they make one think that the bears are back. Let’s explore the hypothesis from different angles.
Monthly (unchanged since Jul 1)
In June gold made a dramatic reversal and produced a solid Dark Cloud Cover (1 more point down and it would be a Bearish Engulfing). The move shifted the odds to the dark side on the monthly frame. However, the odds are not as high as they would be after engulfing and the candle requires a confirmation in July. From that perspective, a modest rally at the beginning of the month is quite possible.
The monthly indicators so far support further downwards moves.
Gold formed four green candles in a row after the Tower Top. The rally, however, is anemic This weekly candle is a High-Wave doji that is likely to signal a top.
The odds that gold has been consolidating after a sizeable move down are very high. It would be logical for gold to form a Falling 3 Methods next week as long as the price stays below ~$1815-25.
The weekly indicators continue to deteriorate:
– PSAR bearish;
– MACD line and histogram moved below 0;
– bearish 8/20 EMA cross.
Note that the weekly candle stopped precisely below 8 EMA line for the second week in a row and it happened in the last hours before the closure. Hmm.
From the previous weekly, still valid: “Possible development – horizontal within $1750-1815 channel. There is nothing bullish until we can see a solid green candle closed above $1815.“
Gold rallied for 12 days without a sizeable pullback. It was definitely due and today’s candle reflected it perfectly. My forecast from previous week worked precisely.
Based on the shorter time frames, it looks like the price could drop to $1790 rather fast, then take a pause and continue down.
Odds: Strong Bearish
The EW counts and projections remain the same as in the previous weekly. The wave off the bottom retraced precisely 0.5 of the wave A/1. While the rally can be viewed as wave a of a bigger B/2, there is also a possibility that the top on Thursday was the top of wave B/2.
The wave down looks very aggressive for now – you can tell this by seeing a Three Black Crows on the 4hr chart. This could be the sign of wave 3 (alternative count on the chart).
As the wave down just started, it is difficult to make the projections and I will update as soon as I have enough data.
While I keep the blue count on the chart, the probability of it is very low for now.
Gold was damaged greatly in June on the monthly and weekly frames. The long-term odds are on the dark side.
Gold could sharply drop to $1790 area at the beginning of the week. Than it could take a pause for 1-2 days and resume its marching down.
If the next week closes below $1760, this would make a Falling 3 Methods I’ve been talking about for a while. The bearish odds would greatly increase if this happens.
If the next week closes above ~$1815-1820, this could be a first sign of the longer rally (low probability).
For a confirmed rally, we should see the bullish signs at least on the weekly charts. So far there is none.
The longer term forecast and targets were discussed in details in the Monthly Analysis (link below).
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