Wednesday, July 31, 2013
Gold: A Good Time for Bears to Back Off
I have studied gold's bull market in detail.....for more hours than I hope most good folks have time to spare. The daily and weekly cycles I tediously documented with the assistance of my ability to write ThinkScript code using the Think or Swim platform. If you are interested is seeing the details, here is a post that will show you the details.
Something went awry in December of 2012. The daily and intermediate cycles that worked like clockwork from 2001 suddenly were screwed up. Who gets the credit for this I can only speculate. It doesn't matter though - knowing who and why will not change the past.
But there is one thing about gold's daily cycles that has NOT changed, even once. And that is the fact that each and every gold daily cycle breaks its price trend line before beginning a new daily cycle.
We have not yet broken the current intermediate cycle trend line - but for now anyway, that consistent truth remains in tact, as well.
The point of this post is to alert those interested in gold's price behavior to the fact that the trend line of the current daily cycle begun on June 28 has been broken. If gold's low of earlier this morning turns out to be the end of the daily cycle (Day 23 - which is entirely average for gold's daily cycles) then I think all bears should be warned to get out of our way - because the bull is coming.
The thing I did not draw on this chart is the pennant pattern that gold has formed. Usually, the pennant pattern is a continuation pattern that marks the half way point of an extended rally. If that develops this time (as I strongly suspect will be the case), the move up from $1180 to the center of the pennant at $1325 is $145. This projects price up to at least ($1325 + $145) $1470 and odds are good it will occur in the time frame of just 4 weeks (or slightly less).
If I were a gold bear, I'd really have to think long and hard about doing anything at this point except running.