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Weekend Market Analysis 23 July 2017

Jul 23rd, 2017

Conclusion

The gold price continues to bounce up to the long term resistance line and closed this week at $1254.90 as it once again approaches resistance. The new bull market support line from the 8 year cycle low in Dec 2015 forms an equilateral triangle which must be breached as we now approach the apex. Many commentaries are suggesting resistance will be breached soon and some are suggesting the new bull market support will be breached, while some even suggest long term support will be reached (or breached) at prices below $1000.

Gold prospects remain positive as long as the new bull market support trendline holds.  The current rally, unfortunately,  is accompanied by an anaemic rally in miners lacking conviction with another decline in metals and miners expected before reaching a sustainable low. The marked drop in Dollar value is expected to rally soon and this will arrest the gold rally which should still drop to below $1200.

Continued weakness in the US$ has now reached the 1st stage decline target (closing the week at $93.68) en route to the final decline target. But in so doing has also reached a region of strong resistance increasing the likelihood of a meaningful bounce which could test 200-Dema.

General equities (Dow Jones Ind Ave) closed the week at new highs with most commentaries claiming yet more new highs with buy signal suggestions. The reality is however that the Dow is laboured and exhausted with strong divergence and reducing volumes.

 

US$

The US$ continues to drop closing the week at $93.68. All the indicators are pointing down although the cycle is excessively stretched and a short term bottom likely soon.

Continued weakness in the US$ has now reached the 1st stage decline target en route to the final decline target. But in so doing has also reached a region of strong resistance increasing the likelihood of a meaningful bounce which could test 200-Dema.

 

 

Gold

The long term gold chart, since the all-time high in Aug 2011, illustrates the powerful resistance (blue) and support (red) trendlines, and the new bull market support since the 8 year cycle low in Dec 2015 (green). Gold continues to reach resistance and closed this week at $1254.90 as it once again approaches resistance. The blue and green trendlines form an equilateral triangle which must be breached as we approach the apex.

Many commentaries are suggesting resistance will be breached soon and some are suggesting new bull market support (green) will be breached, while some even suggest long term support (red) will be reached (or breached) at prices below $1000.

Gold prospects remain positive as long as the new bull market support trendline holds.  The marked drop in Dollar value is expected to rally soon and this will arrest the gold rally which should still drop to below $1200.

 

Gold rallied strongly from a low of $1204 to close the week at $1254.90 punching through both 50-Dema and 200-Dema convincingly. This may extend towards $1260 or higher but the rebound is accompanied by an anaemic rally in miners lacking conviction with another decline in metals and miners expected before reaching a sustainable low below $1200.

Gold re-captured the higher ground above the quad-bottom support trendline and closed the week above both 50-Dema and 200-Dema. However the slow Stochastic is now above 80 and supports a price decline next together with the anaemic rally in miners. Consecutive closes above $1265 will invalidate our proposition.

 

 

US Miners

The GDX US miners closed up above 50-Dema and should encounter strong resistance between $22.40 – $22.80. The threat of penetrating support at $21 remains which will likely correspond with gold below $1200. An increase above the resistance trendline will invalidate our proposition.

 

 

DUST US miners bear index

The DUST chart illustrates the continued price drop supporting the gold rally.

 

General equities

General equities (Dow Jones Ind Ave) closed the week at new highs with most commentaries claiming yet more new highs with buy signal suggestions. The reality is however that the Dow is laboured and exhausted with strong divergence and reducing volumes.

 

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