Gold has been beaten down pretty good since the 2011 highs. And it seems like the past year or so has been a “wear the bulls out” period, as Gold has traded sideways to lower in a grinding fashion. Back in October, I wrote a post on Gold showing how a “fundamental frequency target” can be derived using the “major” first swing to develop price and time targets. The target date was December 24.
As you can see in the chart below we missed the Gold price target by 30 to 40 bucks, but the cycle showed up on the 24th (and produced a turn). I am now looking for gold price targets to the upside.
Gold – 4 Hour Price Chart
I am now projecting an initial gold price target UP into the downtrend line. This should be the most formidable resistance Gold will encounter in the next couple days / weeks. It is in the zone of 1270 to 1290.
Remember, this move UP should continue for a while (multi-month). There are a couple of ways that I see it playing out for bulls:
1. A major low is in, setting the stage for another bull market advance (lower probability)
OR
2. A 3 wave correction is underway after a nearly 3 year decline (higher probability). This may include a gold price target as high as 1526. This, corresponding with a near term top in the US Dollar should bring some cash back into Gold.
Note in the longer term chart below that the Relative Strength Index (RSI) bounced at it’s lowest level since 1999 when the advance began. Also note that previous highs in the RSI have been in the bullish portion of the RSI range. That being said, I believe we’ll get a very good roadmap developed as the Gold RSI (weekly) goes up in the 60-70 range to determine the next “big move” in Gold.
For now, I expect a multi-month corrective bounce to unfold … the gold price targets and PATTERNS for that bounce will be updated as they unfold.
Gold Weekly Chart
Active investors can also track/trade Gold via the SPDR Gold Trust ETF (GLD). Have a great week and thanks again for reading.
Follow Bart on Twitter: @BartsCharts
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
