GOLD bearish signs - look for $1346 - 1400 to be support
Updated
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Overall I remain bullish on gold and silver, however, I am looking for a pull-back to add to my position. We may be looking forward to new all time highs in USD terms (gold has recently reached new all time highs in over 70 national currencies including first world western economies; e.g. AUD, NZD, CAD, Norwegian Krone).
There are strong fundamental forces pushing gold up at the moment, such as a weakening USD, lowering interest rates, equity market volatility (the NYSE has been in a bear market for the past 20 months), global growth concerns, considerable global debt concerns, and increasing geopolitical uncertainty. This is the sort of environment that gold does well in.
As you can see from the chart, I am expecting a pull-back before gold continues up to between $1560 to $1746 (and possibly higher) in the next few months. As stated, I expect $1346 - 1400 to act as strong support around the 200SMA / break out as there is a minor shake-out before higher prices are set.
Why do I expect a pull-back?
- As a big believer and user of Elliot Wave principle, I expect a wave (4) correction before the next push. Wave (4) corrections tend towards complex corrections, and are common places to see triangles, these corrections can take some time to complete.
- RSI divergence; I have labelled some areas of marked RSI divergence S, T, U, V (RSI divergence just highlights areas of declining momentum and possible turning points - as you can see, it is often quite accurate);
- S shows moderately strong bullish divergence,
- T, and U show strong bullish divergence,
- U shows strong bearish divergence - indicating a possible upcoming area of consolidation.
I am not sure if it will go as low as 1346.75 (wave (1) peak, but it may. From industry sources, gold and silver are more and more scarce and retail buyers are expecting much higher targets before considering selling.
Good luck everyone
Overall I remain bullish on gold and silver, however, I am looking for a pull-back to add to my position. We may be looking forward to new all time highs in USD terms (gold has recently reached new all time highs in over 70 national currencies including first world western economies; e.g. AUD, NZD, CAD, Norwegian Krone).
There are strong fundamental forces pushing gold up at the moment, such as a weakening USD, lowering interest rates, equity market volatility (the NYSE has been in a bear market for the past 20 months), global growth concerns, considerable global debt concerns, and increasing geopolitical uncertainty. This is the sort of environment that gold does well in.
As you can see from the chart, I am expecting a pull-back before gold continues up to between $1560 to $1746 (and possibly higher) in the next few months. As stated, I expect $1346 - 1400 to act as strong support around the 200SMA / break out as there is a minor shake-out before higher prices are set.
Why do I expect a pull-back?
- As a big believer and user of Elliot Wave principle, I expect a wave (4) correction before the next push. Wave (4) corrections tend towards complex corrections, and are common places to see triangles, these corrections can take some time to complete.
- RSI divergence; I have labelled some areas of marked RSI divergence S, T, U, V (RSI divergence just highlights areas of declining momentum and possible turning points - as you can see, it is often quite accurate);
- S shows moderately strong bullish divergence,
- T, and U show strong bullish divergence,
- U shows strong bearish divergence - indicating a possible upcoming area of consolidation.
I am not sure if it will go as low as 1346.75 (wave (1) peak, but it may. From industry sources, gold and silver are more and more scarce and retail buyers are expecting much higher targets before considering selling.
Good luck everyone
Note
Note
While there was another trend-line touch on the 26th of August, I believe my view is still intact. The ECB just lowered deposit interest rates to -0.5% from 0.4% (the first change since 2016) and has restarted quantitative easing with no specified timeline for completion (EUR20 bllion in bond purchases per month until...). That caused a small spike yesterday as the EUR lost ground against most international currencies. This, I think, further strengthens the case for owning gold if you live in Europe. There will remain some strong buying pressure from Europe as a result and we are also entering the Indian wedding season which typically strengthens demand (because like all world cultures India places a very high cultural value on gold - despite government import restrictions and additional import and sales taxes being levied on gold in India this will help to support what should be very strong demand from around the world at a time of significant economic uncertainty).
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