Gold Delivers Bearish Follow Through

Gold closed below the 10 day MA on Monday.

Gold ran into resistance at the 2100 level last week. We discussed on Thursday that a close below the 10 day MA would signal the daily cycle decline. Gold should go on to turn the 10 day MA lower as is seeks out its DCL. However, gold is in a daily uptrend. If gold forms a swing low above the lower daily cycle band then gold will remain in its daily uptrend and trigger a cycle band buy signal.

Miner Volatility

Russia attacking Ukraine caused a lot of volatility in the Miners. 

The Miners have been consolidating below the gap that left behind in June and above the previous intermediate cycle high. The Miners are currently in a daily uptrend.  A bullish break out of consolidation will indicate a continuation of the daily uptrend and trigger a cycle band buy signal – with not much resistance until the 38.50 level.  But a close below the 10 day MA will signal the daily cycle decline. 

Volatility

I believe that stocks printed their daily cycle low on Thursday and quite possibly their intermediate cycle low on Thursday as well.

One of the criteria for an intermediate cycle low is for stocks to form a weekly swing low, which they did. However stocks will need to break through some resistance before we can be assured that the intermediate cycle low has been set.

Stocks are facing resistance from the 50 week MA and 10 week MA. Stocks will likely be volatile until they are able to break through this resistance. A close above the 10 week MA will have us label week 20 as the intermediate cycle low.

Stocks Cross Above Resistance Line

Monday during the pre-market we noted that stocks were running into resistance.

We also noted that stocks have been consolidating below resistance for the past few months.

After consolidating below resistance for 2 months, breaking out convincingly above the resistance level can lead to a a trending move. Stops can be moved to the new breakout level.

Running Into Resistance

Stocks are running into resistance at the previous breakout level.

The initial surge out of the DCL caused stocks to get a bit extended above the 10 day MA. The 10 day MA is beginning to flatten out. Stocks will need to get the 10 day MA to turn higher before the rally out of the DCL can gain any traction.

Stocks are heading into the most bullish time of the year. If stocks can quickly breakout above the all-time high of 4743.83, that could trigger a melt-up phase.

Major Resistance for the Miners

We discussed last week how there is a change in behavior for the Miners. RSI being embedded in overbought along with the Miners closing above the upper daily cycle band are characteristic of a new intermediate cycle.

The Miners lost the 200 day MA in June and have been unable to close back above it. For the past few days the Miners have been consolidating the break above the 50 Day MA. If (once) they break higher, then 200 day MA is the next area of major resistance for the Miners. The odds that areas of resistance turning a cycle lower increase as the daily cycle matures, so there is a good chance that the 200 day MA will be a short-term top for the Miners.

Oil Loses The 10 Day MA

Oil was running into resistance at the 50 day MA for the past week before closing below the 10 day MA on Thursday.

The bigger picture shows that oil is a pattern of forming lower highs and lower lows. A break below the 67.00 support level will signal the daily cycle decline. The peak on day 8 indicates a left translated daily cycle formation that aligns with oil being in a daily downtrend. Oil will remain in its daily downtrend unless it closes above the upper daily cycle band.

Gold Held Support

Gold ran into resistance at the 200 day MA on Tuesday, then formed a swing high on Wednesday, closing below the 50 day MA.

However, gold did not deliver bearish follow through. Instead, gold formed a bullish reversal on Thursday — closing above support from the converging 50 day MA and 10 day MA. Thursday was only day 13 for the daily gold cycle, leaving gold up to 2 to 4 weeks before printing a DCL. So there is plenty of time for gold to make another leg higher. A swing low here will set gold up for a potential break above the 200 day MA. Long positions can be entered (or added to) on a swing low, using the converging 50 day MA and 10 day MA as the stop.

Gold Breaks Through Resistance

Gold broke through a key resistance level on Thursday.

After peaking on day 11, gold formed a swing high and then was contained by the 10 day MA — until Thursday. On Thursday gold opened above the 10 day MA and went on to close above both the 200 day MA and the 50 day MA. This established a new high on day 21, which shifts the odds towards a right translated daily cycle formation. Gold also closed above the upper daily cycle band on Thursday. Closing above the upper daily cycle band ends the daily downtrend and begins a new daily uptrend.