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 short, medium, and long term

20 Jun 2016 1:55 PM | Bill Downey (Administrator)


GOLD UPDATE 

The uncertainty around the U.K. referendum should get markets moving this week. A U.K. vote to leave the European Union would be immediately disruptive to global financial markets, and the Euro will be hurt while Sterling and the US Dollar (and potentially gold, but not guarantees.

In fact, turbulence and division in Europe would likely drive capital meaningfully into U.S. securities and treasuries, and importantly drive the dollar sharply higher. After perhaps an initial pop in gold on the unlikely event of Brexit, gold could give up the soft ground it built up upon.

Odds favor that gold has begun a seasonal pullback. A close above 1322 would negate that scenario.

Many are banking on uncertainty and chaos causing a stock market shakeup for America along with Europe, but I'm doubtful of the severity and duration of any such blow. The only thing limiting frightened EU area capital flows into U.S. investment might be our election uncertainty and concern about the policies and statements of some of the candidates still in play. But the Brexit vote is this coming week, and our presidential election is not until November. As a result, if the citizens of the U.K. decide to leave the EU, the dollar should see immediate and sharp benefit. Riskier American assets like stocks should see benefit, if not immediately, then not before too long after the storm. Strong relative dollar gains versus the British pound and the euro would price down gold in dollar terms. The passage of time would alleviate fear, and usher capital back to risky assets and out of gold. But what if the U.K. determines to remain in the EU?

I believe if Brexit is voted down, the dollar and gold should each give up ground over the short-term.

Gold and the 2016 rally

Gold has had a great move so far in 2016 and last Thursday we reached the KEY PIVOT POINT IN GOLD (1308-1322). Gold surpassed the 2015 high at 1308 got as high as 1313. Enough selling came in to take gold down 30 dollars at one point. The key was gold did not close above 1308 or 1300 for that matter.

WE NEED A WEEKLY MONTHLY CLOSE ABOVE 1322 in order to continue higher. Resistance will be strong from 1322-1340.

Support is 1265-1272 and 1249-1255 and 1205-1222. A weekly close below 1205 would do technical damage to gold and open the door to 1150-1175. The intermediate term trend remain up but cycles need to be watched.   Odds favor perhaps another correction.  If we close above 1322 it will negate the pullback.   Other wise expect sideways to lower. 

Lets go to the next chart.


Cycles

The next short term cycle is due June 20th (plus/minus 72 hour). Thus the window is open for a turn. That Thursday high might have been it. In addition we had a cycle inversion where gold has gone from making Red cycle highs to blue cycle highs. Gold does best when we make RED CYCLE HIGHS. Blue cycle highs warn of a pause in gold and a pullback is favored for July. When we have blue cycle highs, odds favor gold is in corrective mode so be watchful. Price can go up but it can turn on a dime. Hopefully we will get another inversion this summer when the summer is done.

Finally the yellow line is where the intermediate term cycles take place. While there is no guarantee a high will be put in, we should favor it until 1322 is taken out. If cycles play out, odds favor the next two weeks should be sideways to lower (with occasional bounces).

The next short term cycle is due Jul 11th (plus/minus 72 hours). Support is near 1220.



Medium Term Gold

On a medium term basis the trend rmains up. Support is 1150-1190. Resistance is 1322-1340. The triple green line is where the MOMENTUM line is for gold. Once gold closes monthly above that triple green line, look for gold to make a major move higher.


Long Term

Gold has completed 4 waves on the long term (or is completing the 4th one). Wave 5 lies ahead and it should be a big one.


GOLD STOCKS

The HUI gold index has completed the first wave of 5. Strong resistance lies from 250-180. Support is near 175. Gold stocks are usually weak during June and sometimes all summer. Thus it would be reasonable to expect a summer pullback. Any time gold bullion closes above 1322 on a monthly basis, then gold stocks should find another leg.


Summary

Odds favor a gold pullback takes place in July.

Bottom line

Any close above 1322 on a monthly basis, will more than likely be enougjh confirmation thjat our call for a major low in gold favored either Dec ember or March. Dec came in as the low.

If there is a crisis like we had in 2008 ---- it still possible gold will go down but as you might know, once the crash took place and the bottom was found, gold almost TRIPLED going into 2011. I So if gold is dragged down initially, it will explode higher like in 2008.

The chart below shows just how dangerous things have become.  The chart show how many times the dollar changes hand.   Right now spending is drying up and you can imaging what that is doing to tax revenues.  

A debt collapse and global depression look straight  ahead.   Expect Civil unrest to explode,  and a major war as well.




Technical Analysis :: Gold & Silver

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