I love K.I.S.S charts (keep it simple stupid).
Why? Because they help clear all the mud out of a chart and the over analysis. Analysis is great and I love it when it comes to charts and technical analysis. However, too much analysis is sometimes too confusing and cloudy. Ultimately we want clarity as much as possible.
For me clarity comes from the long term chart time frames a strong respect for price and tape action behavior predictors and then sometimes forward looking events.
Lets get the forward looking event out of the way first. USA election 2016 in November. From my point of view there is zero doubt that this election is going to mark a dramatic shift in policy and decision making for the USA. I hate to get into politics discussion but for me this is going to be a key driver and potential turning point for markets/economy and sentiment at least as far as the USA is concerned. And many times what the USA does sort of takes the rest of the world down the rabbit hole too.
So having said that, now we confront the current bullish stance of the USA dollar index. On the weekly and daily time frames the US dollar index appears to be in large cup and handle formation ready to break out north of typical 100 resistance. This also resembles a high tight flag with the previous vertical leg about 9 trading months. If we project a typical A B C follow move that continues in time symmetry then we can project that the next major leg duration of the US Dollar index is likely to be about 9 months. I have no idea if we will get the full 9 month rally again or if it will be just 6 months. Or perhaps it will be 11 months right into the election. Either way, it makes sense for the dollar to turn near the election as new policies and chaos from Washington confronts the markets.
The inverse of the dollar is gold. Gold is weak obviously. It looks like gold wants to dive down to near long term trendline support between 875 and 900. Of course it does not have to touch this up trendline. It could reverse before it. Perhaps this depends on how cumbersome (or not) the us dollar move north is. I suspect that the gold price will make some type of inverse head and shoulders pattern to cement the bottom. The alternative is a V shaped spike bottom as in the 1975 case, however this looks less likely to me as now there are many more stakeholders in these markets.
So the bottom line is that gold is looking like it wants to find a FINAL low in 2016 ideally towards the mid to 3/4 point of 2016. This would present an opportune time to keep powder dry and build more powder for the so called 'buy of a lifetime'.
If you like this chart please hit the like button (thumbs up) in the top left corner of the chart !!!
Why? Because they help clear all the mud out of a chart and the over analysis. Analysis is great and I love it when it comes to charts and technical analysis. However, too much analysis is sometimes too confusing and cloudy. Ultimately we want clarity as much as possible.
For me clarity comes from the long term chart time frames a strong respect for price and tape action behavior predictors and then sometimes forward looking events.
Lets get the forward looking event out of the way first. USA election 2016 in November. From my point of view there is zero doubt that this election is going to mark a dramatic shift in policy and decision making for the USA. I hate to get into politics discussion but for me this is going to be a key driver and potential turning point for markets/economy and sentiment at least as far as the USA is concerned. And many times what the USA does sort of takes the rest of the world down the rabbit hole too.
So having said that, now we confront the current bullish stance of the USA dollar index. On the weekly and daily time frames the US dollar index appears to be in large cup and handle formation ready to break out north of typical 100 resistance. This also resembles a high tight flag with the previous vertical leg about 9 trading months. If we project a typical A B C follow move that continues in time symmetry then we can project that the next major leg duration of the US Dollar index is likely to be about 9 months. I have no idea if we will get the full 9 month rally again or if it will be just 6 months. Or perhaps it will be 11 months right into the election. Either way, it makes sense for the dollar to turn near the election as new policies and chaos from Washington confronts the markets.
The inverse of the dollar is gold. Gold is weak obviously. It looks like gold wants to dive down to near long term trendline support between 875 and 900. Of course it does not have to touch this up trendline. It could reverse before it. Perhaps this depends on how cumbersome (or not) the us dollar move north is. I suspect that the gold price will make some type of inverse head and shoulders pattern to cement the bottom. The alternative is a V shaped spike bottom as in the 1975 case, however this looks less likely to me as now there are many more stakeholders in these markets.
So the bottom line is that gold is looking like it wants to find a FINAL low in 2016 ideally towards the mid to 3/4 point of 2016. This would present an opportune time to keep powder dry and build more powder for the so called 'buy of a lifetime'.
If you like this chart please hit the like button (thumbs up) in the top left corner of the chart !!!