Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start - 31st Oct 14
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Gold Price Bullish Falling Wedge

Commodities / Gold and Silver 2014 Aug 04, 2014 - 03:19 PM GMT

By: Clive_Maund

Commodities

We called the exact top in gold to the day in the last update 3 weeks ago, as it has since reacted back. Now the picture is more messy, with conflicting indications, but let's see what we can make of it. There was no update for these 3 weeks as we were waiting for this decline to run its course (no point in working for the sake of it).


On the 6-month gold chart we can see how the forecast decline was kicked off by a sharp drop, but as it has proceeded it has diminished in force, and it now looks like the minor downtrend has developed into a bullish Falling Wedge. With this Wedge now closing up a breakout and rally looks imminent, made more likely by a "piercing pattern" appearing on the chart on Friday, and also by the strong dollar having hit a short-term target in a very overbought state on Wednesday and Thursday, which we will look at shortly. It was this strong dollar which forced gold and silver lower in recent weeks. Disappointing for bulls, however, is the fact that the extreme COT readings of a few weeks back have not eased off much.

Gold 6-Month Chart

The 1-year chart for gold is shown below for the purposes of comparing it to the COT chart immediately below it...

Gold 1-Year Chart

Gold's COT structure has eased on the reaction back of recent weeks, but not enough to provide much cheer for the bullish camp...

The 4-year chart for gold is interesting as it enables us to examine to advantage the potential base pattern forming in gold for over a year. Many analysts have been grappling to define this pattern, which is not a Head-and-Shoulders bottom nor a normal Triangle, but something else. It is now thought that it is probably a "Fish-Head" Triangle, which is a type of Triangle where its boundaries converge at an increasingly rapid rate. As we can see, if it is a true Fish Head Triangle, then breakout is imminent, and as with normal Triangles, breakout can be in either direction.

Gold 4-Year Chart

Given the geopolitical mayhem of recent weeks, with Russia being singled out as the new enemy by the Military - Industrial complex, for reasons set out in Why they are making an enemy of Russia, which is now a freely available article, and Israel running amok in Gaza, gold has been surprisingly weak, even given the negative influence of the strong dollar rally, and the continuing high COT readings do not help the bullish case either. So, although we are expecting a relief rally by gold as the dollar consolidates or reacts back, it is important note that it may not succeed in breaking out upside from the Triangle, at least not yet.

The long-term 15-year chart shows that gold is at a critical juncture, as it is cornered between the falling red downtrend line shown, and its long-term uptrend support line. This is the perfect point for a major new uptrend to start, and seasonals are favorable, but the COTs don't look positive.

Gold 15-Year Chart

On the 6-month dollar index chart we can see how it arrived at a trendline target in an overbought state last week, and then started to react back on Friday. Further consolidation/reaction looks likely, although the dollar could start a moonshot if the stockmarket crashes soon, and here we should note that Treasuries are unlikely to provide safe haven as they did in 2008. This because, after years of extraordinarily low interest rates, rates are now almost at zero, so the only way for them to go is up, and if that happens bond prices should crash too, along with the stockmarket. This will be the result of the economy growing at a considerably faster clip than expected putting upward pressure on interest rates in an environment of debt saturation and the Fed backing out of asset purchases too late, as usual.

US Dollar Index 6-Month Chart

Meanwhile, on the 6-month chart for Light Crude, we can see that it has been surprisingly weak in the recent past, given what has been going in the Mid-East and with Russia, and it is noteworthy that it fell hard on the day that the stockmarket plunged last week. This suggests that when the stockmarket crashes it will tank. In itself it is not a good sign for gold and silver.

Light Crude Oil 6-Month Chart

Speaking of the general stockmarket, although it plunged on one day last week, it has still not broken down from the giant bearish Rising Wedge shown on the 8-year chart for the S&P500 index below. When that happens, and it looks likely soon given that the Wedge is now closing up, a lot of market players can be expected to jam the exits, all trying to get out at once, and we could see a particularly disorderly situation and a savage decline. It is considered prudent to get your bear ETFs and Puts on board ahead of time. We will be looking at some soon on the site.

S&P500 8-Year Chart

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2014 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014