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What’s Ahead For Gold?

What’s Ahead For Gold?

news.goldseek.com / By Gary Savage / 20 April 2017

It’s very late in gold’s intermediate cycle (18 weeks) and it’s now due for an intermediate degree correction. As most know, I think gold is probably stuck in a difficult basing pattern this year. The big reversal on election night drove gold sharply back below the 200 DMA and that took the fire out of the metals sector. So instead of a continuation of the baby bull we are now left with a difficult basing pattern that could take the better part of the year to play out. It’s just going to take some time to turn that downward sloping 200 week moving average back up.

Some patience is called for right now. Gold is very deep into its smaller daily cycle (27 days). It needs to complete a short term correction. That means it needs to drop far enough to break the cycle uptrend line, drop below the 10 day moving average, and it should spend enough time below the 10 to turn it down. So there’s no hurry to buy the dip right now. As of Friday short term sentiment was at 83% bulls in GLD. That’s just way too bullish. We should see sentiment drop back below 15% bulls before the daily cycle low is complete.

The bounce out of the next daily cycle low is the dangerous one as that is the cycle that should be left translated and complete the move down into a final intermediate degree bottom. Many traders fall victim to the final daily cycle and buy too soon only to get caught when the cycle left translates and moves down into it’s final ICL.

Gold will need to break it’s larger intermediate trend line before we start looking for a more lasting bottom. As you can see in the next chart the junior miners have already broken that trend line suggesting they are leading the metals down into the ICL.