Gold Entering New Cycle

By AG Thorson

Sunday, November 18, 2018 3:48 PM EDT

It appears gold is following a new 30-32 day cycle. Prices reached a cycle low on Tuesday, November 13th. We are three trading days into the next period, and the cycle turning point should arrive in late December.

The dollar cycle peaked on Monday, November 12th. That explains gold resilience on Monday and Tuesday as it appeared the dollar was breaking out of a 3-month consolidation. The breakout was false, and prices are dropping into a cycle low.

The bounce in metals and miners could last anywhere from 1-3 weeks. How high and how far they rebound depends on when/where the dollar finds a cycle low. The current dollar cycle supports a decline into late November early December. Consequently, metals and miners could bounce for another 2-weeks.

I’ll review the charts, but it may be worth trying to play the 1-2 week rebound. I’ll make a decision and update members on Monday.

GOLD

The 6-month gold cycle has been difficult to track. But it seems a more frequent 30-32 day cycle has emerged with some consistency. So what’s that mean? It suggests that we are 3-days into a new 30-day cycle and that the next turning point (probably a low) should arrive between the 27th and 31st of December.

I think we know approximately when the next low will come – now we need to figure out where. That, unfortunately, is a much harder question and depends on how where this new 30-day cycle peaks. If it peaks below $1246, then I’m pretty sure gold will break the $1167 low in late December. If this cycle closes progressively above $1246, then gold is likely to remain above the $1167 level in December.

US DOLLAR

Gold will likely peak when the dollar reaches a low. The dollar peaked on Monday, November 12th and prices are dropping into a daily cycle low. The short-term 16-17 day cycle suggests a bottom between November 30th and December 4th. Structurally I see a 5-wave structure off the 93.39 low. To maintain the bullish formation prices need to bottom above the 94.40 level.

SILVER

Prices are bouncing out of a daily cycle low with gold. If this cycle peaks below $14.95 then I think we can expect a test and potential breakdown below 2015’s $13.62 low in late December. A sustained rally above $14.95 would be bullish and recommend a double bottom.

GDX

Miners bottomed with the gold cycle on Tuesday; prices are bouncing. Where or when miners top depends on gold and the dollar. There is stiff resistance in GDX between $20.50, and $21.00…if prices make it that far. I don’t know if it’s worth trying to play a 1-2 week bounce. I’ll consider the odds and decide on Monday.

GDXJ

The MFI was oversold, and prices produced a bullish engulfing day as well as a potential double bottom (island) reversal. How high and how far prices bounce is anybody’s guess. I do see some bullish potential in the charts, so I may play the bounce in case it turns out to be more.

SPY

I believe the pullback to 267.01 was a simple correction to fill the various gaps. I think prices will trend higher into year-end. I’m looking to add to my long stock positions early next week and place a stop below Thursday’s bullish gap fill reversal day.

WTIC

It’s hard to believe, but it looks like oil may be producing another bearish flag pattern. It could turn out to be a false flag, but for the moment, I think we need to respect it. I’ll be looking to buy oil and energy stocks if prices drop below last weeks $54.75 low.

CRB

The CRB broke the head and shoulders pattern neckline but finished the week above 186. Technically, we have a breach but not a confirmed breakdown. A weekly close below 186 would recommend a 3-year cycle decline below 180 in Q1 2019. Decay in the CRB would imply weaker commodity prices for the next 1-3 months.

I think metals and miners are bouncing. They could rally a little or a lot – It all depends on the dollar. Once prices top, I will narrow down December targets.

GOLD