MARKETS UPDATE (11:30 pm EST)
The cycle pattern in gold and silver is still not clear. It is possible that both metals started new medium-term cycles in the second half of December, but this isn't confirmed yet. If they did, then this market could turn very bullish. This entire week could be a reversal zone for the precious metals (with pivot points especially likely on Tuesday and Friday) and prices have been rising. It would therefore not be unusual to see gold and silver back down at some point this week, especially as both metals are now encountering strong resistance areas in their charts. Today gold made a new weekly high while silver did not so we also now have a potential case of intermarket bearish divergence (until silver makes a new high). If these are indeed new cycles then any correction now shouldn't be serious and may be a good opportunity to buy. If gold moves down to the $1,170 area and silver towards $16.50, I may consider a long position this week. At some point (perhaps after a small correction) gold will have to close above $1,220 and silver above $17.50 to confirm any new bullish trend. Still on the sidelines of both metals.
In last Thursday's blog I wrote:
"The U.S. Dollar Index broke back above 101 yesterday but is now encountering resistance at the underside of a downtrend channel it breached on Tuesday. This could be a set-up for another fall in the dollar and a surge up in gold unless reaction to Trump's inauguration kicks the dollar up (it could do the opposite)."
Well, the dollar fell after the inauguration (Sunday and today) and is now again below 101 and is looking quite bearish. This supports the bullish case for the precious metals discussed above. Directional momentum for the dollar is still mixed bullish and bearish, however, so we can't confirm a downtrend just yet.
Crude oil still seems undecided on what direction it wants to take. If prices can break below $51.66 (March contract chart), we will look for a sub-cycle bottom to buy this week or next. If crude stays above $51.66, however, we could soon see prices challenging the high (so far) of the current medium-term cycle at $56.24. Remaining on the sidelines of crude oil for now.
The cycle pattern in gold and silver is still not clear. It is possible that both metals started new medium-term cycles in the second half of December, but this isn't confirmed yet. If they did, then this market could turn very bullish. This entire week could be a reversal zone for the precious metals (with pivot points especially likely on Tuesday and Friday) and prices have been rising. It would therefore not be unusual to see gold and silver back down at some point this week, especially as both metals are now encountering strong resistance areas in their charts. Today gold made a new weekly high while silver did not so we also now have a potential case of intermarket bearish divergence (until silver makes a new high). If these are indeed new cycles then any correction now shouldn't be serious and may be a good opportunity to buy. If gold moves down to the $1,170 area and silver towards $16.50, I may consider a long position this week. At some point (perhaps after a small correction) gold will have to close above $1,220 and silver above $17.50 to confirm any new bullish trend. Still on the sidelines of both metals.
In last Thursday's blog I wrote:
"The U.S. Dollar Index broke back above 101 yesterday but is now encountering resistance at the underside of a downtrend channel it breached on Tuesday. This could be a set-up for another fall in the dollar and a surge up in gold unless reaction to Trump's inauguration kicks the dollar up (it could do the opposite)."
Well, the dollar fell after the inauguration (Sunday and today) and is now again below 101 and is looking quite bearish. This supports the bullish case for the precious metals discussed above. Directional momentum for the dollar is still mixed bullish and bearish, however, so we can't confirm a downtrend just yet.
Crude oil still seems undecided on what direction it wants to take. If prices can break below $51.66 (March contract chart), we will look for a sub-cycle bottom to buy this week or next. If crude stays above $51.66, however, we could soon see prices challenging the high (so far) of the current medium-term cycle at $56.24. Remaining on the sidelines of crude oil for now.
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