Most of my intraday charts are at the 90 min scales with 500 bars. I like to use the same settings all the time which helps to stabilize the charts. At the top which I think is wave 2 in Minor degree, the death cross developed and the rest is now history. After every death cross comes a golden cross, so it would not take much of a price rally, before oil would be back in a golden cross situation.
The trend line I have will not hold and when it breaks out then it gives me a clue that one higher degree is still in play. The $55 price level would be the first price target, but the entire rally can go much further.
Even now I can draw a bullish wedge which is also very bullish at least in the short term.
The Gold/Oil ratio has not changed all that much and is around 25.7 and hitting the ratio brick wall. Oil crashed from a ratio of 20:1 so a 25:1 ratio is not all that cheap just yet.
Hopefully, we’ll know by the end of the week if another little bullish phase is in effect.
Once I looked at what the commercial hedgers did last week I had to post something. Last week the commercials added some of the most bearish positions in gold that I have seen.
Sure gold can go higher as the speculators are the true trend chaser!
This record goes back to June 2018 with a huge commercial short position and speculators having a huge long position. It’s impossible for both groups to be right at the same time.
From my experience, it’s the speculators that are the trend chasers and usually the first people to panic when they find out that they are wrong. All it takes is one group to see the set-up at the same time. A large group or a small group matters little as small panics happen all the time.
One strong drop in the gold price can send the speculators into sheer panic as they try and squirm their way out of a bull trap.
My little moon app tells me that we are also at a full moon which can be very bearish at times. The problem with using the moon cycles is that they are not that reliable as some make them out to be. At times major reversals have occurred during the full moon, but so have new moons.
The next new moon should be July 3, 2019, still a few weeks away. Sometimes midweek will supply a turning in the stock markets so a reversal could still take a few days.
I would love to count down 5 waves in Minute degree but this wave structure just doesn’t fit a wave 2 rally, as I would like to see the SP500 initially go a bit deeper. Otherwise, we would need some wild extensions for this impending 5 wave run in Minute degree.
Commercial hedgers net short positions hardly show up, which is still fairly bullish from my perspective. I’ll give this bullish run until the end of the week where this strong bullish trend faces a correction or an end to this bullish phase. If this June bull run is just a big bear market rally then eventually the SP500 would have to retrace the 2730 price level.
The Gold/SP500 ratio has not changed that much and it’s still at the 2.16:1 range which is still far too expensive, as gold ratios go.
Since the 2018 bottom (wave 4) the US dollar has been in a bullish phase and at this point, I still can’t see a major trend reversal in the making. With the entire world trying to destroy the US dollar it still looks like it wants to keep pushing higher.
Since the 2019 bottom, the US dollar has produced an overlapping pattern that frankly has been a real challenge to sort out. 2019 has turned into a diagonal nightmare because diagonal waves can be mistaken for a bearish rally it is easy to come up with a wave count where the US dollar is going to crash.
I’ve mentioned it many times but I think the US dollar is in a much bigger bull market that we can imagine and no amount of fundamental reasoning can change its direction until it is ready to do so. The real bottom with the US dollar was back in 2008 when the entire world thought the USD had died and was advised to get out of the USD and into gold.
All the gold bugs are eager to see the US dollar crash again and it may happen, as any bull market needs good healthy corrections to stay alive.
I’m sure my bullish wave counts are going against the US dollar bears and at one point the commercial hedgers shifted to a massive net short position that I thought would finish the US dollar bull market.
Last week the commercial hedgers made a very bullish move as they added 2597 contracts to their long side. Don’t get me wrong as the commercials are still net short by a large margin.
Our last bottom with the US dollar was about May 7, 2019, which could be a bottom for another leg up. Any bullish move should push the US dollar to a new record high even if it’s only by a very slim margin.
Commercials turned very bearish towards our CAD and gold last week, which also helps my bullish case.