Gold was hammered and lost over 30 points in the pre-market.
We discussed two the concerns regarding gold in the Weekend Report.
1) That gold has not delivered a clear and convincing trend line break so Friday was either day 5 or day 27.
2) Friday’s SOS on the Junior Miners possibly indicating that gold’s decline was still imminent
Today’s drop did not see a trend line break but one should be forth coming but the SOS by the Juniors on Friday was prescient. So assuming we get a clear and convincing trend line break here, it seems that we are faced with the same dilemma, is gold on day 6 or day 28.
If gold is on day 28, then it is getting late in its timing band and a daily cycle low should occur sooner than later. Today’s decline stopped just shy of a support zone as well as breaching the daily cycle trend line. Over the next few days if gold can breach the daily cycle trend line and form a bullish reversal off the rising 50 day MA, then the possibility exists that this was an extended daily cycle and a stop can be placed just below the 50 MA..
However if day 22 was the daily cycle low then that makes Monday day 6.
And if Monday was day 6, then gold has formed a failed daily cycle. A failed daily cycle would signal that the intermediate cycle is in decline. And at week 6, that leaves 12 – 16 weeks for gold to seek out its intermediate low.
So, if this intermediate cycle is still in ascent then the 50 & 200 MA should act as support during this daily cycle decline. If gold loses these two moving averages, then it is likely that the intermediate decline has begun.