Daily Archives: December 3, 2018

Gold Daily Chart Rally Update And The Death Cross!

 

The gold Death Cross on this daily chart happened around the $1305 price level. Fundamental analysts don’t have a clue about what a Death Cross is or the long-term damage that they forecast. Gold was well below the 50-day MA but now has found a bit of support with the 50-day MA.  The 200-day MA is still far away before the 50-day slices into the 200-day MA.  The 5 waves I show are all diagonal wave structures so the 5th wave is also a small zigzag. I’m going to stay with the same degree level even though I only had about 3-degree levels to work with. I stay with 15-degree levels as when I run out at Miniscule degree, then I know that all degree levels may need a second look.

Switch this gold chart to a weekly chart and we can see gold sitting at the 50-day MA.

Since the August bottom of $1160, gold looks like a triangle, but we should not get a triangle in a wave 1-2 positions. Any break above $1240 will work to finish off the last zigzag wave.

Gold is fooling us as silver has gone the opposite way and was on the cusp of creating a new bear market low. Last weeks COT report still have the commercials net short in gold and silver which does not get me excited about some super bullish move still to come. Three or four gold stock ETFs have already created new record lows, so it’s not just one thing that I look at.

Commercial hedgers are short in palladium, platinum, copper, and aluminum, which is also very bearish in the longer term.

 

 

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Brent Crude Rally Update

 

 

This is a daily chart from the  February 2019 contract month as all 2018 contracts are starting to end. Brent like WTI has held its bottom price, but don’t get all excited about some major bullish move that will provide trading bliss with no worries. Good luck with that, as trends do not just reverse because of some single event or conference event.

Last month Brent crude hit a low of 57.78 and started a reversal producing another spike in the process. There should be more upside to come as small degree 5 wave sequences have started to develop. Any zigzag can produce nice impulse waves, and it is just a matter of time when this Brent crude run starts to run on empty.

Commercial hedgers have had net long positions for some time, but they have massive short positions in WTI. Two conflicting indicators by any stretch, so a call for this bullish move to eventually end will not be popular.

Since May 2018 I have been tracking the Gold/Brent ratio which can tell us a different story. Today it sits at 19.99:1, which is a bit cheaper than what it was at 16:1, but still on the very expensive side when compared to the gold cash price.  Yes, there are small differences between WTI and Brent which can change the ratio a bit.

I don’t look for some wild Fibonacci retracements as nobody really knows what wave count we are really on. Looking for a previous counter rally peak is quicker and far easier to look for another potential turning. This could be at the $68 price level. Everybody gets a Santa gift this December as investors jump back on the bullish bandwagon. Emotional panic moves in or out of an asset class never last that long as most of it can be due to panic short covering. All fundamental reasons for oil’s bullish move can’t be trusted as there is a lot of cheating going on with fake news as well. You’ve heard about fake news and one source of fake news is just propaganda practiced by every dictatorship around the world. Even democracies get in on the propaganda wars.

 

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USD Index From A Bear To A Bull in 23 Years: 1985-2008 Review

 

From the February 1985 peak (164.720) the US dollar index started a meltdown that should have sent gold soaring. By the time the USD hit this peak gold already had crashed. In 1992 the US hit another record bottom that I can only count as a diagonal wave structure. Another fast move up and then down again producing a higher low, which is a sign of a bullish move still to come. This move had 5 waves in it alright, but only in Minor degree. The entire USD bullish move was coming to an end and the gold price was crushed at $252 in August of 1999!

From this 2001 US dollar peak, the bearish move resumed, driving the gold price and the oil price with it. By March 2008 the US Dollar was coming to a major bottom that many of the good contrarians of the day saw coming. The 2008 bottom was a Cycle degree wave 4 low. It was not some little bottom in an on-going bear market. Everybody on the planet hated the US dollar at that time, and a panic into gold started to pick up speed.

It was oil that crashed in 2008, 3 years before gold. Since the 2008 bottom, I counted the US dollar as a bear market rally which proved futile forcing a review looking for a much bigger bullish move.

The big top declining trend line has now been broken also signaling a bigger bullish move still to come. Another indicator that a huge US dollar bull market is still in progress is that falling wedge we see.  For most of 2018 the trade war rhetoric has been flying all around the world and yet the US dollar was in a rally the entire time.

Now that the Fed has given the green light, investors jumped back into the stock markets again. Shouldn’t the US dollar keep soaring if trade war peace is being declared at the G20 meeting? With tensions around the trade issue being reduced there would be no need to hold gold as a hedge. Commercial traders are already net short by a wide margin and it will be interesting to see if they close off their short positions with this Fridays COT report.

Longer term the US dollar looks like a run of 5 waves in Primary degree is in effect, and the 89 price level is the start of the 5th wave in Intermediate degree.

Understanding the US dollar bull market is critical as this is not a short-term bullish blip on the charts, not by a long shot. Recently the US dollar has made some moves that could still be bearish which may support the gold price this week.

There are three main prices that should get retraced and the first near-term price target is 103.800. The 121 price level is next which could take a few years before it gets hit!

The real threat is deflation, which has more to do with demographics or the world birthrate crash than a good stock market.

 

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