This morning gold dropped sharply below its 15-day moving average, but then prices snapped back up and are closing in the upper part of today's range (bullish behavior). Prices got down to $1970 which is in our acceptable range for a sub-cycle low, and that low is due this week. This low is also happening inside our current reversal zone (that also ends this week). The minimum requirement for a sub-cycle low would be a test of the 15-day moving average and at least a 3 day drop from a crest (this is day three from last Friday's $2047 high). This looks like a good time to cover our short position in gold and reverse to the long side. (We entered our short position on March 20, so we are just about breaking even on this trade.)
It looks like gold is turning bullish and will now challenge the all-time high of $2070, and there's a good chance it will exceed that high and confirm that a new long-term cycle in gold is underway (see my recent blogs on gold's long-term cycle - I will discuss this in more detail later). Today I am covering (unloading) my short position and entering a long position in gold. For now, we can put a stop loss on this trade based on a close below the 45-day moving average (now at $1925 and rising slowly).
Silver also dropped sharply this morning below its 15-day moving average and then snapped back up and is closing above it. Today's low was at $24.66. I am going to raise my previous target for a sub-cycle low ($22 - $24) to $23 - $25. This puts today's low within acceptable range. Silver's sub-cycle low is due either this week or next. This week is within our general reversal zone, but next Thursday and Friday is a potentially strong "pivot point" for silver, so it's possible to see a sub-cycle low then. I am going to hold off going long in silver for now. If prices dip below the 15-day moving average over the next few days and hold above $23, we will consider going long.
Today crude oil prices broke sharply below support at $80 (May contract chart) and seem to be closing just below the 15-day moving average (around $79.21). This move is now starting to close the wide "gap-up" space from April 3 when prices jumped overnight from $75.67 to $80.10. As I stated in yesterday's blog, it's a little early for a sub-cycle low this week, but next week might qualify. Let's wait to see if prices can go lower into next week before we think about going long. Ideally, we would like to see prices stay above the 45-day moving average, and right now that just happens to be near the lower end of that "gap-up" space just discussed (around $76). We will stay on the sidelines of crude for now.