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Gold Price Is Getting Ready For Its Next Breakout

Commodities / Gold & Silver 2020 Feb 18, 2020 - 03:28 PM GMT

By: Avi_Gilburt

Commodities

In late October and again in November, I began preparing my subscribers for the last rally phase we experienced in the metals complex. I even penned a number of public articles outlining my expectations for the same. In fact, on November 11, I published an article entitled "Gold Is Likely Approaching A Local Bottom." As we now know, gold actually struck its bottom at the time within 24 hours of that article. And, I then reiterated my expectations in a blog post at the end of November entitled "Buy Gold On Black Friday." Even at that time, the GLD was in the 137 region before it began its run almost 10% higher since that time.

Then, on January 5 of this year, I published another article entitled "We Are Approaching A Pullback In Gold."


Within that article, I outlined my expectations:

I think we will be seeing a pullback/consolidation over the coming weeks/months before the next larger rally phase in the metals complex takes hold. While many investors and traders have been fighting this rally in gold over the past several weeks due to the COT report and other reasons, I think we are finally approaching a time where those that have been wrongly shorting this complex may have an opportunity to cover those shorts.

While we may see a bit more of a push higher in the complex in January, I think we are approaching a local top soon. And, once struck, we will likely see a multi-week pullback in the complex before the next rally phase takes us well into the middle of 2020.
As long as the GLD pulls back correctively and holds over the 139/142 support region, then I will remain bullish for the rest of 2020, with my next major upside target in the 170 region. However, a break down below that support would provide us with a strong warning that something more bearish may be playing out for 2020. So, please practice appropriate risk management for the next pullback. But, a successful test of support over the coming month or two will likely launch us into a very strong rally in the metals complex into the middle of 2020.

The next day, gold struck a high before beginning a pullback. And, while it did strike a marginally higher high at the end of January, we have basically remained in a sideways trading/consolidation phase since that time, which have fulfilled my expectations from my prior article.

To be honest, I am unsure if this consolidation/pullback has yet run its course. As long as we remain below 150 in the GLD, I think we may see one more test of the 142/145 support region. However, the next time we see a strong break out through the 150 region, the next major test of resistance will be in the 154-56GLD region. As long as the market can blow through that region, the door will open to take us strongly up towards the 170 region.

And, should we see the market blow through the 156 region, the 154 level will become our next higher support level. However, if we cannot blow through that region in the coming months, then we may be in for more bearish action in the metals in 2020. So, as you can see, that region will represent a very important next test for the bull market off the late 2015 and early 2016 lows in the complex.

Lastly, I want to remind those that read my analysis that it is based upon probabilities, as there is no such thing as certainty within non-linear environments such as the financial markets. The majority of the time, the market provides us with a relatively clear path and provides us strong goal posts as it moves through its structures. But, none of my analysis is meant to be seen as a certainty.

Those that have followed me for many years know how well we have done in the markets we track. Yet, there are times when the markets will take what I view as the lesser probability path, as it did in the last half of 2019 in the equity market. So, please use my analysis and goal posts as an outline as to how I see the probabilities presented to us within the market.

See charts illustrating Avi's wave counts on GLD.

Avi Gilburt is a widely followed Elliott Wave analyst and founder of ElliottWaveTrader.net, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded FATRADER.com, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.

© 2020 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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