Where We at with GOLD?


BACK STORY - In Q1 2018, there was a run against the US Dollar, which saw the Euro pushing up to a +3 year high against the Buck, and the Pound trading to a post EU referendum peak. All of this would change in Q2, with the major currencies relenting, as an intense wave of Dollar demand resurfaced. But into Q4, we've been seeing demand for the major currencies again, with signs of another big downturn in the US Dollar. And these signs have now crossed over into the GOLD market as well.

cartoon oct 16

THE CLOUD - The Ichimoku indicator is an exceptionally reliable trend indicator and is simple enough to use. The indicator is made up of a confluence of moving averages, all taking the form of a cloud-like formation. If the market price is above the cloud, the market is said to be in an uptrend, and if the market price is below the cloud, the market is said to be in a downtrend. Anything in the cloud is neutral.

TECHNICALS - In September, EURUSD and GBPUSD broke back above their respective daily Ichimoku clouds for the first time since breaking down below their clouds all the way back in April. And yet, at the time, GOLD wasn't ready to show that same bullish break above the cloud, despite the moves in the other correlated markets. Now, in October, after seeing some weakness supported on dips in the Euro and Pound (above their 2018 lows), GOLD has been more encouraged and has finally broken back above its daily Ichimoku cloud.

Gold is another low vol market that could be on the verge of the next big breakout.

TAKEAWAY - I believe this could be the catalyst the yellow metal has been looking for to finally get going again. We see room for an acceleration towards critical resistance in the form of the 2016 high at 1275. If GOLD takes out 1275, things could very exciting, to the point where I wouldn't rule out a rocketing surge towards 2000 in the months that follow. As far as setbacks go, we’d want to see any weakness supported ahead of 1190, with only a daily close back below 1190 to compromise the outlook.


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