Gold Weekly Chart Review

Bull market or bear rally is the million dollar question?  What the majority do call a bull market, can be just a big bear market rally from an EWP point of view.  Since the 2011 peak we’ve had more bear rallies than we can count, well we can count them if we have nothing better to do. Many were Minor degree moves with one Intermediate degree bull move that all have failed.

I was fooled as well but slowly succumbed to the bears as counter rallies were always completely retraced.  Sure, at times the price is important but the pattern is far more important. If we look back to the 2015 low ($1050), gold has been in a bullish phase since then and is now a little over 3 years long in duration.  Since the 2015 bottom, we’ve had two higher lows which is a conventional way of calling a bull market.

Each of the three bullish phases topped out and was followed by a crash and recovery. We ended up with three peaks that have to produce some serious resistance, with the third peak reaching $1346 before gold started to correct again.  We would need this gold run to continue past the $1400 price, and once that happens you will hear the world screaming, “Upside Breakout”.

Since the 2016 top, we now have two sets of Head&Shoulder patterns already formed. Are they bullish H&S patterns or bearish patterns? We also have a wedge that has formed, so any new direction is not all that clear at this time. Gold has 3 major support prices that would have to hold if a true bullish phase is still in progress, but if gold has been in a 3-year bear rally, then all three price supports will get completely retraced. The three support prices would be $1160, $1120 and the last one would be $1050?

Gold has also been in a rally right along with stocks, so gold could also crash right along with the stock markets. When fear strikes logic thinking is thrown out the window and all those little emotional “Algorithms” will panic, selling out before bullish investors lose money.  Sell stops are piled up below present prices, and you don’t need a smart “Algorithm” to trigger them.

AI trading is also becoming a major factor and I see it more of a bad thing than a good thing.

I would be far more bullish if the commercial traders were in a net long position, but the sad fact is that they are not!

 

 

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