Jnug to Gold "Short term bounce before end of year drop"

Lets us just focus on the Blue arrows first. I drew those because I am anticipating that we get a little closer to that trend line before we bounce. Next Fridays options expiration average is around $18 as of Friday. So I have not bought Jnug yet. I would feel more comfortable buying next week if Jnug shows that it will bounce off that trend line. I am expecting that gold is also ready to bounce, if it hasn't started already. Some people are calling for 5 waves down until the yearly cycle low at the end of the year. That being said, I am with them for the most part but I am not sure if it will be 5 waves or 3 wave ABC correction from this years rally. Either way, It appears that gold is bouncing off the 50 DMA and bottom BBand. I think it could drop closer to 1280 but we will see. So the question that remains is what in the heck is gold going to do for the intermediate and long term. It is difficult to tell.....Did we really breakout and start wave 3 or is this pattern simply a zig zag large B wave? I guess that will have to be answered latter in the year depending on how deep the YCL correction is. That fact that we did not break out above last years highs should make people proceed with caution. If the correction falls quickly back into that triangle that we just broke out of long before that YCL is due, then we could possibly break down below it. That would indeed point to my original thought that the last year and a half was just a B wave pattern and that we still have a C wave to go. If that did happen, I do not think that the C wave would last as long (in duration) as the A wave did because just think about what that would do to all those bulls who are so sure that its nothing but up from hear. They are going to dump their gold holdings so so fast, look out below. So I am going to attach my GLD chart to show this bearish possibility. It is a much clearer chart.

This is the weekly GLD chart. Just look at all those gaps that would equate to the $650 - $750 range for gold. Another thing is that...do you see that on this GLD chart, we have not broken out of the wedge (long term downtrend line)but instead just touched it a couple weeks ago. Maybe its nothing but I am going to respect it and keep an eye on it. .718% retracement is actually the $612 mark for gold. Also take a look on this zoomed in weekly chart for GLD.

Look at all those gaps for earlier this year and early 2016. Moving along......If I were to expect a decent bounce anywhere, it would probably be where all three Moving averages are converging. The 50, 100, and 200 weekly MA are all near that long term up trend line. SO for the next week or two I am neutral to bullish but after that, I would short gold for the reminder of the year. Hopefully Lil Kim does not blow up a Hydrogen bomb in the pacific, that would mess things up...and not just for the charts. GL

Comment:

I found an article on seeking alpha that should be read. It pertains to US real rates and the 10 year, rising with the Feds tightening of the balance sheets. All outside forces aside (namely North Korea fear trade), If Us real rates rise then gold should tank. The article was written on September 21 and is titled " ECB and Federal Reserve balance sheets".