UPDATES on PRECIOUS METALS and CRUDE OIL (8:00 pm EST)
Gold and silver charts are very tricky to call right now. It does look like we can label the medium-term cycles in both metals as having started with their lows on Sept. 24 ($1849 in gold and $21.75 in silver). That means they are relatively young (7 weeks), but are they going to be bullish cycles? That is the important question now. If the cycles are bullish, gold could get up to $2200 or even $2300. A bullish silver cycle could end up in the $28 - $36 range. If these cycles are going to be bearish, however, prices will start to break below those Sept. 24 lows, and the trend will be down for many more weeks. Monday's highs were on one of our reversal zone pivot points (Nov. 9), and prices in both metals dropped steeply from there. Monday's drop was only one day - prices have stabilized and are now hovering above Monday's lows. A significant correction lasts more than one day, so if prices don't break below Monday's lows soon, we might see these metals make a second high this week or next (esp, around our Nov. 16 pivot point). As long as those Sept. 24 lows hold, these metals look very bullish, but we are not going to buy until we see how far down the current reversal goes.
Another risk in going long in the precious metals at the moment comes from looking at the chart of the U.S. Dollar Index. The dollar's current medium-term cycle is most likely approaching its final bottom over the next 5 weeks (it may even have happened with Monday's low at 92.13). Once this low is in, the greenback will start a new cycle and will rally strongly. Usually a dollar rally pushes down gold and silver prices. But we also need to keep in mind that we are not in normal financial times, and sometimes the dollar and precious metals rise (and fall) together.
Let's stay on the sidelines of gold and silver for now. Even if these metals rally from here, this week's and next week's reversal zone should put a cap on any price surge. Any new lows could give us a buying opportunity (as long as they don't go TOO low).
Crude oil most likely started a new medium-term cycle with it's "double-bottom" lows around $37 (Dec. contract chart) on Sept. 8 and Oct. 2. Prices dropped below $34 on Nov. 2. Normally, when prices go below the start of a cycle, it means the cycle is turning bearish. But prices made a new cycle high on Nov. 11 ($43.06) which could mean the cycle is negating that bearish signal. On the other hand, prices closed near $42 on that Nov. 11 date, and that could be seen as a "triple top" to $42 highs on Sept. 18 and Oct. 20, which would be very bearish. Until we get a clear directional trend in this market, we will remain on the sidelines.
Gold and silver charts are very tricky to call right now. It does look like we can label the medium-term cycles in both metals as having started with their lows on Sept. 24 ($1849 in gold and $21.75 in silver). That means they are relatively young (7 weeks), but are they going to be bullish cycles? That is the important question now. If the cycles are bullish, gold could get up to $2200 or even $2300. A bullish silver cycle could end up in the $28 - $36 range. If these cycles are going to be bearish, however, prices will start to break below those Sept. 24 lows, and the trend will be down for many more weeks. Monday's highs were on one of our reversal zone pivot points (Nov. 9), and prices in both metals dropped steeply from there. Monday's drop was only one day - prices have stabilized and are now hovering above Monday's lows. A significant correction lasts more than one day, so if prices don't break below Monday's lows soon, we might see these metals make a second high this week or next (esp, around our Nov. 16 pivot point). As long as those Sept. 24 lows hold, these metals look very bullish, but we are not going to buy until we see how far down the current reversal goes.
Another risk in going long in the precious metals at the moment comes from looking at the chart of the U.S. Dollar Index. The dollar's current medium-term cycle is most likely approaching its final bottom over the next 5 weeks (it may even have happened with Monday's low at 92.13). Once this low is in, the greenback will start a new cycle and will rally strongly. Usually a dollar rally pushes down gold and silver prices. But we also need to keep in mind that we are not in normal financial times, and sometimes the dollar and precious metals rise (and fall) together.
Let's stay on the sidelines of gold and silver for now. Even if these metals rally from here, this week's and next week's reversal zone should put a cap on any price surge. Any new lows could give us a buying opportunity (as long as they don't go TOO low).
Crude oil most likely started a new medium-term cycle with it's "double-bottom" lows around $37 (Dec. contract chart) on Sept. 8 and Oct. 2. Prices dropped below $34 on Nov. 2. Normally, when prices go below the start of a cycle, it means the cycle is turning bearish. But prices made a new cycle high on Nov. 11 ($43.06) which could mean the cycle is negating that bearish signal. On the other hand, prices closed near $42 on that Nov. 11 date, and that could be seen as a "triple top" to $42 highs on Sept. 18 and Oct. 20, which would be very bearish. Until we get a clear directional trend in this market, we will remain on the sidelines.
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