Getting A Handle On Things

Not sure it’s a valid chart pattern. The ‘cup and handle’ should complete in months, not years !

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:cup_with_handle_continuation

Time for a strong coffee…

Industrial Metals

http://www.zerohedge.com/news/2017-09-21/metals-massacre-iron-ore-enters-bear-market-copper-collapses-1-month-lows

Dollar 200 wma Should Contain Any Rally

Looking back at 2002 the 200 wma, once breached to the downside, acted as overhead resistance, capping any later rallies (on a weekly close basis). It did, however act as a ‘magnet’, with price clinging on for about 3 months before it finally let go.

In 1985, the dollar pierced the 200 wma to the downside and didn’t look back.

So what will happen this time around ? The 200 wma is currently in the 92.7 area…

Bigger picture ? Ugly…

Stormy Seas

Heading for that golden glow in the distance. For what it’s worth, I don’t think this latest drop is too concerning. Frustrating, but the big picture still looks fine.

2009 – A Useful Guide ?

Well, whilst we’re waiting for Fed fireworks, I thought I’d have a closer look at 2009 price action in gold. In general, the pattern from 2007 onwards has been a very good fit for our current recovery from the late 2015 bottom. Just for fun, if we follow the action in the first chart, it gives us what you can see in the second chart. No particular reason why it should match exactly, but it’ll be interesting to see how things unfold…

GDX – Shorter Term Prospects

Are not so rosy. At this point I think it could go either way. Geo-politics may play a big part, as well as the continuing dollar struggles. I’m pretty confident longer term i.e. that the big picture trend is up. I’m less confident about the next 2-3 months. There is considerable evidence to suggest a downtrend developing into a December low. The question remains, do we go straight down from here, or, maybe more likely, up first and then down. It may turn out that any down move is very limited, but the chart below shows a couple of potential targets to bear in mind. How things play out over the coming weeks will determine the starting point of my first green up arrow in my earlier post. I certainly wouldn’t take my earlier chart at face value either, it’s intended to suggest the overall trends of upward price action and weakness going forwards, coupled with the fact that I think we will be making new highs in the next 2-3 years, or at the very least, challenging the old highs.

My Take On GDX Big Picture

Here’s my humble view on the likely path for GDX

Perspective

Things could be choppy for the next few weeks/months. I’m fairly confident we’re going to see some sort of low point in December. What happens between now and then I’m less sure about. We’re probably getting close to a short term low, and it remains to be seen how much we can recover before that end of year low. I will acknowledge that greater forces could take hold and prevent that end of year dip from being a big deal – it’s something to be aware of though, and prepared for. The 2007 to 2011 analog is a very close match at the moment. If it were to hold, we wouldn’t see that end of year dip. I’ve included that chart below, as it’s worth being aware of. My preferred ‘model’ is weakness into year end, but I, for one, will be quite happy if it doesn’t happen.

The second chart below shows quite clearly (I think), how the cycles are crucial. They act like a magnet drawing price up into the cycle high and repelling price back down into the cycle low. This chart is telling us in simple terms that the price pressure is upwards for the next few years. Sit tight and be right 🙂

 

Looking Down – Getting Mentally Prepared

I’m a little bit disappointed we didn’t get closer to $1400 on this latest rally, and there may still be a possibility we reach higher in the coming few weeks. However, I’m expecting the long running history of late December lows to take us through a very frustrating period. I’m sure there will be a lot of pessimism around and bearish articles. The dollar will, no doubt stage some sort of ‘relief rally’. I haven’t looked at dollar resistance levels yet, but it may begin to feel like we’re backing a loser here in the tent. If you look at the charts below, you can see that in the grand scheme of things, a drop to $1200 would be nothing out of the ordinary, and give us a higher high. That crucial symmetrical triangle has one last role to play – to draw price to it’s apex before the rubber band finally catapults price to $1550, with all that stored potential energy. That’s my working theory – we need to be mentally prepared for this. Now lets see how it plays out 🙂

De-Dollarization

I think we already knew this, but a timely reminder http://www.zerohedge.com/news/2017-09-16/suddenly-de-dollarization-thing