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Weekend Market Analysis 5 Nov 2017

Nov 5th, 2017

Conclusion

International markets continue to inch up with continued negative divergences, so no change there, while Trump’s tax cut plan and the US Fed chair elect Jerome Powell is being digested by markets. The US$ consolidates its breakout and closes the week up at 94.86 with every likelihood of moving higher, whilst gold closed down at $1269.20 in breaking down through a bear flag with every likelihood of moving lower.

Gold is likely to break down through the neckline of a short term ‘head & shoulders’ pattern as it continues to build a consolidation pattern, stretching back to mid-2013, which includes a massive ‘inverted head & shoulders’ pattern with the neckline at $1350 which it is likely to penetrate up through in early 2018 which in turn will take gold to $1800.

 

US$

The US$ rally is consolidating above the breakout at 94.2 and should now move higher towards a region of resistance at 97, which is higher by the equivalent depth of the inverted ‘head and shoulders’ pattern it has just broken through. The oscillators are moving up to support this.

 

 

The Dollar daily chart illustrates the penetration through the neckline of the inverted ‘head and shoulders’ pattern and the likely increase towards the region of resistance (red). The rally consolidation closed the week at 94.86 with a bullish ‘Hammer’ candle which should see a further advance.  However, in this case, the oscillators have already moved up to higher levels and are perhaps not as encouraging.

 

 

Gold

The long term chart illustrates the gold price re-testing the breakout through long term resistance which may now be invalidated with the stronger Dollar. It would seem gold is likely to drop into a 6 month cycle low before the next leg up in Jan 2018.

 

 

The gold daily chart illustrates the price drop from a bear flag on Friday which is likely to drop further through the neckline of the ‘head & shoulders’ pattern. The region of support is lower down at $1200 and gold might test this level in dropping into a 6 month cycle low in Dec 2017.

 

 

GDX US miners ETF

GDX is poised to penetrate the neckline of a ‘head & shoulders’ pattern which is likely to drop further towards support at 21. The oscillators are already at low levels though which might provide some support.

 

 

DUST US Gold Miners bear index

The inverse picture in the US Gold Miners Bear Index (Dust) indicates the exact opposite of the GDX chart, in supporting lower gold prices in the short term.

 

 

 

Silver

Silver dropped down below 200-Dema and is set to move down further towards a 6 month cycle low in the region of support. The oscillators support further declines.  

 

 

General Equities (Dow Jones)

There is little change in the international equity markets which continue to inch up with continued negative divergences, pointing to a correction soon. The 2 year weekly chart of the Dow Jones illustrates this with a threatening ‘rising wedge’ pattern, plus super-high oscillators. The graph itself shows no sign of topping but it is a simple matter of time before a correction; Perhaps even a huge correction, as detailed in many earlier narratives.

 

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