by Bill Downey     Price Analysis of Gold and Silver
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Technical Analysis Trading Gold, Trading Silver/ analysis By Bill Downey providing key turning points & charts for investors and speculators in Precious Metals Trading, and Precious Metals Markets

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Gold long term charts tell the story of major channel breaks

20 Jul 2015 10:54 PM | Bill Downey (Administrator)

Gold Report ~ July 21 2015
Trend
Long Term ~ Bearish- Need a monthly close above 1800 to confirm the bull market final phase underway. Need a monthly close above 1560 to neutralize the trend.
Medium Term ~ Bearish - Need a monthly close above 1255 and 1255 to remove bearish trend.
Intermediate Term ~ Bearish– Need close above 1172-1182 for higher TREND.
Short Term ~Bearish– market remains in trouble for the downside

Initial Resistance 1115-1122  2nd tier 1128-1133
Support 1080-1090 2nd tier 1040-1150

We have for a longt time advocated that no matter how much money they throw at the economies of the world, the debt level is too much and therefore it will most likely do what it has done in the past.  Crash from its own weight with a resulting outcome of DEBT DEFAULT.  And that my friends is NOT INFLATIONARY--it is the exact opposite.

The more the governments try to confiscate, the worse its going to get.  We said a few years ago that Europe would most likely be the focal point from where the real liquidity crisis emerges and Greece and what the EU is doing has everything pretty much on schedule.   The real crisis begins sometime in the next 6 to 12 months.

Meanwhile, gold is doing what it is supposed to.  TAKING everyone one out.

The fact of the matter is that gold is not an inflationary hedge.  Gold is a head against a PANIC in confidence and a collapse of government. 

When will things change?

When the long term trend in interest rates turn, gold will have its final wave down to wipe out the final hands.  Once that is complete, gold will reverse higher with rates as the BULL MARKET for bonds is on its last leg.  ONCE THE GREEN channel line that has been intact on the chart below for 34 years becomes support ---------and not resistance, rates will quickly move to the upper white line.   Once that upper white line become support,  gold will join hands with rates and do just what it did from 1968 to 1980.  THEY BOTH WILL MOVE HIGHER.  The coming new bear market in bonds won’t be from economic recovery  but from economic panic. LOOK how close we are to a red flag as the green channel line of 34 years tries to contain price.  It may do so for a while longer, but once it become support rates will move up to the white line pretty quick.  Once the white line becomes support, its game over.  We have seen the 300 year low (England) and we will soon learn later this year or early next year that the FED HAS NO CONTROL OF THE GLOBAL LONG TERM interest rate. 

Yes it can AFFECT rates buy when the BEAR MARKET RETURNS,  but the market is too big to control.  What to know why the fed has been threatening higher rates but not doing it?    ITS BECAUSE they are waiting for the chart below to confirm a trend change of higher rates.  THEN the Fed will raise rates and make believe this is all their doing.   In reality, when it comes to long term rates,  the FED is nothing more than trend followers.   PERIOD.

10 year interest rates long term chart

Gold

The last update showed the long term channel line from 2005 had been broken and odds favored lower prices and the big drop today is really part of that technical action.  We leave the chart in from the last update below and added the action since last Thursday. Long term LEVERAGED players are getting wiped out.  So are those holding gold stocks, and silver has gone from 50 to under 15.  While we do have some support at 1080 and 1035-1040,  the real next major support is at the 1000 level.  It doesn’t mean we are going to reach it --- but really, on today’s low, it was only 80 dollars away.  Thus odds do favor that gold will most likely touch that long term line near 1000.  That’s the odds…………but not the ABSOLUTE.  In summary, today’s 50 dollar purge is long term technical people throwing in the towel. 


 Gold long term monthly chart since 2001 with channel lines

On the very short term look for gold resistance at 1115-1120 on Tuesday and then 1128-1133 and 1140-1146.

If gold can hold 1088-1090 on Tuesday it may be an indication that a short term bounce will develop.
 

Gold hourly price chart

Cycles

Here’s what we said on the last update………..

At this point in time the odds favor that gold is going to begin to head lower.   We may see a push higher into the end of the week, but its best to remain bearish overall. 

We did not get any push whatsoever but we did get what the odds favored…lower and the call to remain bearish played out.  Even though futures dropped all the way to 1080 the spot low was 1087.  So today was certainly a candidate for a flush out day. 

But what about now?

Gold should have made a low today and potentially for July.  While the trend is still down, the high volume and the fact that the 1080 was a full 50% retracement of the entire bull market from 1999 to 2011, gives a high odds that gold should bounce back to the 1120-1145 area.  But it certainly doesn’t eliminate a move even lower.    So for now a bounce, but make no mistake----- if we don’t hold 1088-1090 (plus or minus a few bucks) it will remain vulnerable for lower again ---- this time towards the 1000 area.
 
The bottom line, is right now is too early to call the bear market low,  but there are a lot of things to consider.  First off, Silver is holding above its prior low and today’s volume was just as high a when the December low took place as well as the November low. Even then gold struggled but it did eventually manage to provide the one and only rally over the last year from Nov to Jan 2015. However, as you can see above, gold gave it all back.

Of even greater importance is the 1080 low is a full 50% retracement of the entire bull market from 1999 to 2011.  That is usually a significant support point in markets and while we cannot rule out lower because of the extreme weakness, odds do favor that gold should provide some type of support with at least a bounce back potential near this 1080 area.  The chart on the medium term section of this report shows the 50% retrace level.

gold cycles


HUI
Medium Term – Bearish
Medium Term Moving averages – 150.78 – 152.93
Intermediate Term Moving averages – 147.63 – 150.59


The last update said that the long term crash line from 2008 had been broken (below 140) and the chart shows today’s tremendous drop in gold stocks was the acceleration of long term selling and margin calls.  We are now at 13 year lows.  Where does it all end?

Well, the next support is that yellow line just under 100.  Gold stocks have now entered the fifth and final wave down.  Either the yellow line holds or a COMPLETE retracement back to where the bull market started in 2001 is going to occur.  As you know our indicators have been in bearish mode a long time. Can you imagine the balls the Gold GURU’s have by not once saying things were bearish and having called “the low” about 20 times.  One look at the chart says it all.  Everyone who listened to the “guru’s” have been wiped out. 

 HUI gold stock index long term chart

 


Gold Medium Term
Long Term Trend ~ Bearish since Oct 2013 @ 1361
Long term Moving averages 1350 – 1429
Medium Term Trend ~bearish – Moving Averages 1200.83 – 1205.22

Our forecast has been that the chop in gold we were seeing was the precursor to gold breaking towards 1050-1100 and today we arrived right in the middle at 1080.

Like the gold stocks, gold is decisively in its fifth and final wave.  As you can see we are reaching the white support line on the long term chart and the 50% retracement.  This is the first area where gold could bottom but we still feel that the odds are the TRIPLE red channel lines will be tested before its over. 

The BULL/BEAR line is at 1172-1182 area.  We need a weekly and monthly close above those levels in order for the medium term trend to stabilize.

The bottom line to gold is that DUAL YELLOW downtrend line has kept the action in check on the upside for quite a while.  As long as price is below that line, the bear market in gold is still in play.  While this white line on the chart below can provide a bounce, gold most likely has more downside into the red lines.  What is the MAXIMUM DRAWDOWN gold can achieve?  The 680-720 level.  What is the ideal area then?  The 850-1050 level between Oct 2015 and June 2016. 

Gold monthly chart full 50% retracement of bull market
 
GOLD ETF GLD
Moving Average Trend ~ 111.89 – 112.53 –bearish

We have been saying if the 110 area doesn’t hold look for GLD to test 105.  We got there today.  As you can see on the very long term chart, this is the last support until around the 98 area.  Resistance is now 108-110 short term.

Gold ETF GLD monthly chart
 
GDX
Intermediate term Trend   17.50 – 17.87 ~ Bearish
Resistance is at 20.08 – 20.22


GDX has broken the 2008 lows and until we reverse back above it all signs are bearish.
  

GDX monthly price chart

What next ?
All trends in gold remain down and it is not out of the question to have a couple more days like today.  More likely is gold will get some type of bounce but its too early to call a bottom.  As we mentioned earlier, Silver did not make a new low, and the gold volume was huge and prices in this gold bear market reached the 50% retrace level.  That’s often where bear markets find support.

However gold is not your ordinary market so we can’t hang a hot on this just yet.  The only people proclaiming a low here are the ones who have always been bullish and sell gold for a living.  Isn’t it fascinating that the gold market made those who SELL gold the Guru’s.

WHY?

Because once they jumped on the bandwagon in the early 2000’s they have remained bullish thru all of this for the simple reason that they sell gold for a living.

Do yourself a favor.  STOP READING WEBSITES where people sell gold for a living and stop reading websites that make you feel better by having the same bullish opine that you have.  Those people are not guru’s ------ they are even lower than a used car salesman. 


Bottom Line
June often is a turning point but it can extend into July.  We have seen divergence in other markets but gold has yet to show any action that warrants upside.   Indeed, a closing below 1140 this week will keep the pressure on gold.

It’s best to remain bearish overall but a bounce of some type can very well develop here.
We are getting pretty close to the end as metals and metal stocks are all in their 5th and final wave down of this bear market. 

All trends remain down in gold,  but a short term bounce here would not be a surprise.

 



Technical Analysis :: Gold & Silver

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