It’s decision time on the Gold Cycles, we’re down to the business end and the action is about to reveal exactly where Gold is heading in the near future. I believe that gold over the next 4 sessions will reveal where it’s headed over the next 4 months.
I covered my disappointment regarding the 1st Daily Cycle performance last week. Since the Cycle clearly topped with the trend-line break, I warned members to expect $1,704 to be marginally taken out. Well it’s gotten worse since then as the Cycle has given up more than 75% of its gains and is encroaching on the prior Daily and Investor Cycle Lows.
Although the Cycle is now in the timing band for a DCL and gold is oversold, we cannot rule out the possibility that Gold will drop further in a final attempt at breaking the prior Cycle Low. Any Cycle failure at this point would be deemed both a Daily and Investor Cycle failure which sets the scene for another significant 12-16 weeks of declines back down towards the $1,523 level. This type of action seems very unlikely though, considering the Dollar is already into its 12th week and rapidly declining due to its own Daily Cycle failure. Having the Gold and Dollar Cycles fail simultaneously would be extremely unusual, which is why I do not believe it will happen.
Another reason why I expect Gold to hold up is due to the strength being shown by Silver. This poor cousin of Gold is generally much more volatile and with a correlation to gold of over 90% it normally is leading the charge into any Cycle failure. Unlike Gold and the Miners, it’s Daily and Investor Cycles are actually very healthy and bullish. The Daily Cycle has retraced exactly 50%, has fully recharged, and is now right ready to catapult out into its 2nd Daily Cycle. Having Silver remain strong and well bid in this situation is a positive sign.
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