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 and August

08 Aug 2016 10:01 AM | Bill Downey (Administrator)

Overview

The most likely place for gold to peak or undergo a 2016 correction is at the 2011 downtrend line on our weekly chart.  The bears have held the line now for 5 weeks.  Its a time to be cautious in gold.  A close above 1362 this week would change that idea short term.  Otherwise,  look for a test of 1305-1312 or the 1322-1332 area this week.  If short term cycles play out, gold should be making its monthly low near August 18th.  

It looks like a lot of gold inventory is being brought in for anticipated futures buyers who will look to take delivery.  It's not the available category, but odds favor they will use it to settle contract deliveries.


While a lot of inventory is being brought in, it's key to realize that the big boys are short.   They don't always win, but odds favor they try another push down over the next two weeks.  Even in bull markets, there are pullbacks where the big boyz cover shorts and then let the market run higher and then re-short.  Wash and rinse.


Gold Long Term – Moving averages (1218-1252) neutral

The 2011 downtrend line is the most important line for gold to overcome as it’s the last MAJOR downtrend line in the bear market. As long as gold is below this line the summer pullback can continue. There’s support in the 1250-1272 area and then 1222 on the medium term.

The bottom line is gold must overcome this line in order to start the next leg up. Until then, the bears will most likely give their best effort here to get gold to sell off into a good correction. Thus we need to remain cautious until we get above the 1388-1400 area.


US dollar ---Long Term (Bullish)

The one thing that does concern me is the long term look of the US Dollar chart. Although the medium term has been sideways for a year and a half, the most likely scenario or we should say, the odds favor that the US dollar still has a final move up left in the rally that began in 2014. The key will be the 100-104 area. If the US Dollar gets above 104, look out.

If it does happen, expect a major liquidity squeeze and panic. You see, in a liquidity squeeze, the only safe place is where the DEEPEST markets (VOLUME) exist. The US dollar wins that one hands down. That’s where the money would go to park. For now the US Dollar remains in a trading range. The message is we can’t rule out the upside potential of the US dollar. There are times when it is possible for both gold and the US dollar to rally. So this doesn’t eliminate the gold story, but we need to stay on top of what the US dollar does at these levels.


Gold Short Term

We got what we think was the peak last week on our cycle turn near 1360 and it looks like price is going to test 1322-1332 to start the week. If we lose 1320 then look for 1305-1312 next.

In summary, odds favor that gold stays in corrective mode this week. It takes a close above 1362 to change the outlook. The 1346-1355 area should be strong resistance. Let’s zoom out a bit more.


Here’s a view of key August support. It’s a bit different but it does highlight the 1305-1312 area also. If we lose that area, then 1250-1272 comes in play. Remember, on the longer term charts, we are at the 2011 downtrend line, and that is where the deepest correction in gold for 2016 is most likely to develop from.


Gold Cycles

The next cycle turn of August 2nd (plus or minus 72 hours) is complete and the window is closed. The next turn date is August 18th (plus or minus 72 hours).

Gold has set a 1--2 month peak in the first 3--4 trading days of the month - in 2 of the last 3 & 3 of the last 5 months.  August looks like a repeat could be in play.l

The bottom line is we expected a turn back down into the middle of August beginning last week. It is underway. While we never can eliminate a cycle inversion, odds favor gold weakness into the next cycle turn date. There’s support in the 1300-1312 area and then 1260-1272. Odds favor if we lose 1322, gold is heading for one of those two area’s.


What about Silver?

The medium term trend remains up. Goldtrends recommended a long term buy just once since 2011, and that was at 14.38 spot. Any pullbacks to 16-18 should be bought for long term appreciation.

Medium term resistance remains 21.34-21.58 as previously listed. Support lies at 18.75 -19.20. Silver’s latest pullback reached 19.30 and had since bounced back to above the 20 area before the Friday selloff.

While the trend remains up, we should be aware that the 21.34 resistance we are using is one we have often used on the long term. It is the 2008 high and is represented by the Green line we have had on our chart for a number of years. Look how important it is right now on the chart. That is where the Bull/Bear line currently resides for Silver. In other words, it’s the most likely place for a good sized silver pullback attempt. It takes a close above 21.34 to shift the longer term trend out

In summary the trend remains up. The key is whether silver will exceed 21.34. As long as it doesn’t, it will remain below the 2008 price high and the potential to pullback to 18 could still come in play in 2016. The 18.75-19.20 is current support. Odds favor a short term top took place last week and a pullback to mid month is the odds favored outlook at the moment.





Technical Analysis :: Gold & Silver

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