Gold Weekly Analysis
Gold slipped into a small pullback to end the week after four strong sessions. Is this cause for concern or just healthy consolidation? Let’s examine the technicals and see what the candles, trends, and momentum suggest.
CANDLES
GLD
Maybe we’re watching a new universe being born. GLD (and gold) keeps defying gravity and grinding higher. At this point, I’m tempted to pause these updates until we finally get a confirmed change in direction.
Gold
Gold recently rejected two Bearish Engulfing patterns in a row, which typically carry an 80%+ probability of reversal. Perhaps Friday’s Dark Cloud Cover—statistically weaker—should be discounted and treated as an almost certain continuation of the rally. Notably, the monthly RSI has pushed above its 1980 reading, which is quite an achievement.
I’ve already covered the statistical implications of September’s close in the monthly/quarterly report.
That said, gold remains extremely stretched technically and highly vulnerable to a significant drawdown.
GDX Miners
GDX is likely the technical-stretch champion. It survived five (five!) Bearish Engulfing combos in a single wave and kept the daily RSI above 70 for 44 days—I’m not sure I’ve seen both before. When the statistical scale leans to one side for so long, it’s hard not to worry about what comes next.
GDX has likely started a major decline. The weekly candle failed—decisively—to negate the prior week’s Bearish Engulfing. The daily RSI curve is rolling over, which may signal danger for price to follow. Be prepared.
As outlined in the August 21 Long-Term Outlook, gold is likely building a significant top—one that could take months to complete. That hypothesis stands.
Gold – Long Term Outlook – August 21
As discussed previously, “a particular concern is the continued no-break advance in the monthly RSI, which has not been this elevated since 1980—45 years ago. Apparently, this implies a new reality in which gold is never corrected again. However, statistical analysis suggests a potential loss of about 35% if gold follows the average historical path after such an RSI stretch. In May, gold formed a bearish candle—June will show whether that signal is confirmed. Gold is now in a zugzwang position: any move on the monthly frame will only worsen either the technical conditions or the candle structure.”
Elliott Wave: Gold and GDX
I compared Friday’s waves in Gold and GDX side by side. GDX is very close to completing a sizeable, textbook impulse down (wave v still needed). Gold is less convincing on the downside and has a better chance to print another ATH.
Summary:
I’ve been highlighting a series of extreme, rare technical events across the precious-metals and miners complex. GDX may have started a big move down, but gold is not fully set. Both weekly frames closed with bullish candles, while the daily frames risk a bearish reversal. If the initial move is confirmed on Monday/Tuesday, we’ll discuss possible paths and targets. For now, there’s no confirmed reversal—just broad readiness for a big move.
Happy Trading!
