Gold Breakout Triggered on the 180% move!
Take a look at my previous take on Gold for 2021, and why we are in for a potential 180% plus move in the yellow metal. This is not coming in a month or two, the last time the fundamentals and the technicals aligned like this, it took 400 plus days for the completion of this 180% move. We are in Gold for the long term as the confidence crisis in government, central banks and the fiat currency intensifies.
My readers are familiar with the cheap and easy money. Interest rates are not going higher anytime soon. In fact, one can argue they can never rise due to all the debt that needs to be serviced. Hikes into negative territory is more likely going forward...and to be honest, is pretty much a guarantee.
Government fiscal policy is going to increase, especially if the Democrats take the Senate (will be split but the VP gets the deciding vote). This covers the confidence crisis in central banks and the fiat money. My posts from a few years ago mention this. The confidence crisis for government that I mentioned was this: regardless of who wins the next election, neither side will accept the result. This division will continue.
Now heading back to my last piece on Gold. I outlined the fundamentals and technicals there. If you read that piece, an entry trigger was the close above this triangle/wedge pattern. Ideally, by the end of the week, we get a weekly close confirming this. But as of now, we do have a DAILY candle trigger.
As you can see, the price of Gold broke above 1900 and confirmed a wedge/triangle close. Love it. To me, this is an opportunity to go long.
As we see in breakouts, retests are possible. In this case, price can pull back to retest the 1900 zone as it is an important psychological number. In terms of a trendline break, we want to cushion our stop loss below the daily break out candle. In this case, I would say that our long trade is valid as long as the daily candle of Gold does not CLOSE below 1885.
So you all know my LONG term targets, but if one just wanted to swing trade Gold, what are some targets to consider? New record highs in my opinion.
So what I did in that chart was use the handy dandy fibonacci tool on the recent upwards wave on the weekly chart of Gold.
Looking at my fib, you can see price bounced at the 50 fib. Very nice. But we are all interested in the upward fibs. My fib targets for a TRADE would be 2224 and 2462 (let's just use the 2500 zone). Once again, we probably won't reach those targets on a straight pop, but expect some pullbacks on the way up there. Resistance at previously record highs at around 2080 is where we could see some profit taking and perhaps some sellers jump in. There will be a battle there.
Once again, the macro picture is very positive for Gold.
A final word regarding the Senate run-off. If the Democrats win, many are expecting the stock markets to drop. If this does occur, I think Gold and Silver do as well. Since February of this year, Gold has moved with the stock markets. I am still awaiting for a divergence. This will eventually happen, and perhaps Democratic money spending is the trigger for this. So, if we see markets drop tomorrow or for the rest of this week, Gold could pullback to retest our trendline break. Nothing to worry about. It is just if the markets decide they want to drop lower, in this scenario, I would be very intrigued to see how Gold reacts at the breakout zone. Of course if the markets pop, so will Gold .
Oh and one more thing...well two technically:
The GDX and the GDXJ have bounced at our large weekly support zones (which we broke out in April and June). It took us a few months to gain some momentum at this support and this is why patience is key. The technicals held, so our long term trades were valid. Trust the system and your analysis. There were some scary dips below support for the GDXJ, but we reversed and climbed back above.
But of course, most of you probably see what I see. Both the GDX and the GDXJ have the same sort of triangle pattern, although some would say this is a pennant/flag pattern. Regardless, the trendline break indicates a momentum shift.
Very exciting going forward for the Gold market. In summary, a trade is triggered, but for the longer term move as mentioned in my past post, we would want to see a WEEKLY close above the triangle on the Friday close. Pullback is possible and is welcomed because it would meet our criteria for market structure. This pullback can take us back to our trendline break, and we want to see price remain above 1885 on the candle close. Gold can still fall with the stock markets, but sooner than later, we will get the divergence.
My readers are familiar with the cheap and easy money. Interest rates are not going higher anytime soon. In fact, one can argue they can never rise due to all the debt that needs to be serviced. Hikes into negative territory is more likely going forward...and to be honest, is pretty much a guarantee.
Government fiscal policy is going to increase, especially if the Democrats take the Senate (will be split but the VP gets the deciding vote). This covers the confidence crisis in central banks and the fiat money. My posts from a few years ago mention this. The confidence crisis for government that I mentioned was this: regardless of who wins the next election, neither side will accept the result. This division will continue.
Now heading back to my last piece on Gold. I outlined the fundamentals and technicals there. If you read that piece, an entry trigger was the close above this triangle/wedge pattern. Ideally, by the end of the week, we get a weekly close confirming this. But as of now, we do have a DAILY candle trigger.
As you can see, the price of Gold broke above 1900 and confirmed a wedge/triangle close. Love it. To me, this is an opportunity to go long.
As we see in breakouts, retests are possible. In this case, price can pull back to retest the 1900 zone as it is an important psychological number. In terms of a trendline break, we want to cushion our stop loss below the daily break out candle. In this case, I would say that our long trade is valid as long as the daily candle of Gold does not CLOSE below 1885.
So you all know my LONG term targets, but if one just wanted to swing trade Gold, what are some targets to consider? New record highs in my opinion.
So what I did in that chart was use the handy dandy fibonacci tool on the recent upwards wave on the weekly chart of Gold.
Looking at my fib, you can see price bounced at the 50 fib. Very nice. But we are all interested in the upward fibs. My fib targets for a TRADE would be 2224 and 2462 (let's just use the 2500 zone). Once again, we probably won't reach those targets on a straight pop, but expect some pullbacks on the way up there. Resistance at previously record highs at around 2080 is where we could see some profit taking and perhaps some sellers jump in. There will be a battle there.
Once again, the macro picture is very positive for Gold.
A final word regarding the Senate run-off. If the Democrats win, many are expecting the stock markets to drop. If this does occur, I think Gold and Silver do as well. Since February of this year, Gold has moved with the stock markets. I am still awaiting for a divergence. This will eventually happen, and perhaps Democratic money spending is the trigger for this. So, if we see markets drop tomorrow or for the rest of this week, Gold could pullback to retest our trendline break. Nothing to worry about. It is just if the markets decide they want to drop lower, in this scenario, I would be very intrigued to see how Gold reacts at the breakout zone. Of course if the markets pop, so will Gold .
Oh and one more thing...well two technically:
The GDX and the GDXJ have bounced at our large weekly support zones (which we broke out in April and June). It took us a few months to gain some momentum at this support and this is why patience is key. The technicals held, so our long term trades were valid. Trust the system and your analysis. There were some scary dips below support for the GDXJ, but we reversed and climbed back above.
But of course, most of you probably see what I see. Both the GDX and the GDXJ have the same sort of triangle pattern, although some would say this is a pennant/flag pattern. Regardless, the trendline break indicates a momentum shift.
Very exciting going forward for the Gold market. In summary, a trade is triggered, but for the longer term move as mentioned in my past post, we would want to see a WEEKLY close above the triangle on the Friday close. Pullback is possible and is welcomed because it would meet our criteria for market structure. This pullback can take us back to our trendline break, and we want to see price remain above 1885 on the candle close. Gold can still fall with the stock markets, but sooner than later, we will get the divergence.
