GOLD TRADE ALERT (2:45 pm EST)
Gold's new medium-term cycle began on Dec. 2 with its low at $1046 and prices rallied to what looks like a subcycle peak of $1110 on Jan. 7. From that peak, prices are now falling into a strong reversal zone. The target for a normal correction in this new cycle's rally would be around $1080 (+/- $8). Gold is entering that range today so it looks like a good point to go long again for a possible rally to $1120 or higher. If we place a tight stop loss for this trade on a close below $1072 we can minimize any potential losses to around 1% if gold plunges lower. Note that this is a short-term trade based on subcycles and long-term traders may wish to stand aside. I am avoiding silver right now because its medium-term cycle could still be bottoming, and the fact that silver's directional momentum just turned 100% bearish supports that. If silver does make a cycle bottom this week (and gold holds above its Dec.2 low), it would be a strong intermarket bearish divergence signal in a reversal zone and I will consider a long position. For now I am entering a long position in gold today and remaining out of silver.
Gold's new medium-term cycle began on Dec. 2 with its low at $1046 and prices rallied to what looks like a subcycle peak of $1110 on Jan. 7. From that peak, prices are now falling into a strong reversal zone. The target for a normal correction in this new cycle's rally would be around $1080 (+/- $8). Gold is entering that range today so it looks like a good point to go long again for a possible rally to $1120 or higher. If we place a tight stop loss for this trade on a close below $1072 we can minimize any potential losses to around 1% if gold plunges lower. Note that this is a short-term trade based on subcycles and long-term traders may wish to stand aside. I am avoiding silver right now because its medium-term cycle could still be bottoming, and the fact that silver's directional momentum just turned 100% bearish supports that. If silver does make a cycle bottom this week (and gold holds above its Dec.2 low), it would be a strong intermarket bearish divergence signal in a reversal zone and I will consider a long position. For now I am entering a long position in gold today and remaining out of silver.
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