Gold Analysis November 2015 (D,W,M)
Created on Sunday, 01 November 2015 09:50
Written by Austin Galt
Let’s revise the technicals of gold using the daily, weekly and monthly charts.
GOLD DAILY CHART
Since the low at $1172 in July 2015 gold has been edging up step by step showing a pattern of higher highs and higher lows. Previously, I showed a broadening low formation which would require the final point 5 low to be down at $1090. I have now given up on that pattern playing out instead favouring another higher low to form shortly.
Where is that higher low likely to be?
I have drawn a downtrend line which shows price breaking above before coming back down. I am looking for price to test the support of this downtrend line and put in a higher low.
Also, I have added Fibonacci retracement levels of the move up from low to recent high at $1191 and I am favouring price to clip the 50% level which stands at $1132.
The Bollinger Bands show price pushing into the lower band and the next solid move off that band will be the start of the next leg up in my opinion.
The RSI is back into oversold territory and I expect the next low is imminent.
I have added moving averages with time periods of 50 (blue) and 100 (red) and these averages have just made a bullish crossover.
Let’s move on to the weekly chart.
GOLD WEEKLY CHART
The PSAR indicator now has a bullish bias with the dots underneath price.
The Bollinger Bands show price recently finding resistance at the upper band and now headed back down with the middle band in sight. I favour this middle band to provide solid support and see in the next higher low. Price may dip just under this middle band before turning back up.
The RSI shows a pattern of higher highs and higher lows indicating strength is building.
The MACD indicator is bullish although the averages appear headed back together. As often happens in these situations is just as the averages appear about to touch price heads back up and the averages continue trending up in bullish fashion. The green highlighted circle shows this exact situation occurring at the first higher low.
Let’s wrap up the analysis with the monthly chart and reacquaint ourselves of the bigger picture.
GOLD MONTHLY CHART
Both the Stochastic and MACD indicators have just made bullish crossovers adding confidence that a big rally is now underway.
The Bollinger Bands show the recent high was at resistance from the middle band. I now expect price to go on with the job and surge through the middle band and then continue to trend up as it hugs the upper band.
The PSAR indicator has a bullish bias after price busted the dots on the upside in October.
I have drawn a bearish Fibonacci Fan which shows the move down generally taking place between the 76.4% and 88.6% angles. Price has been nudging down just below the 88.6% angle and now looks a big threat at busting above this angle. Doing so would look very bullish in my opinion.
I believe the recent low at $1172 was a wave A low and a big bear rally is now underway that will eventually culminate in a wave B high. After that the downtrend should resume and see price head down into a final wave C low. I still expect that final low to be around the $600 mark in the years to come.
I have added Fibonacci retracement levels of the move down from all time high to recent low and there are two levels I am currently focusing on to see in the wave B high. The first is the 50% level at $1496 while the second is the 61.8% level at $1596. Interestingly, this 61.8% level is right around the level price was trading just before the crash back in 2013. I must admit I really like the idea of price recovering to that level before the downtrend resumes.
Summing up, I believe a big bear rally is underway and expect it is about to gain some good momentum.