Gold:SPX ratio persistent RSI divergence and lessons from the past

We believe that Gold will outperform SPX for the next couple of years.As we note to the following chart of Gold:SPX ratio,during the last three years of Gold bear market back in late 90's there was a massive divergence between RSI and price.This divergence lasted about 3 years before the start of the massive gold bull run from 1999-2011.Similarities with these days are obvious: Again a huge divergence on RSI and a rounding bottom of Gold:SPX. 3 years since the beggining of the current divergence will be on spring-summer 2016

Gold's bottom on summer 2016

Gold remains in a well establish bear market since early 2013. Looking at the big picture we believe that currently Gold is running the C leg of an ABC correction that started back in 2012.Specifically gold will probably soon complete the 3rd wave of C and then bounce temporarily before a final leg (5th wave of C) and a bottom at green zone at around 930$ during the 2Q or 3Q of 2016

 We believe that gold will bottom out on summer 2016 along with other major commodities and then a strong upleg will ensue.Hopefully this upleg will not coincide with WW3...

Is gold forming a triangle?

A couple of days ago we suggested 3 possible moves for gold (Gold: A road-map for the next 15 days).At that time we were neutral and in fact we remain neutral on gold.Gold broke below the support line of the rising channel and currently is moving towards 1110 support.

If gold bounces at that level then probably gold is forming a triangle (usually a continuation pattern).

If gold breaks below 1110 and especially below 1090-1095, this will mean a possible move towards 1040-1045.

 

Gold: A road-map for the next 15 days

Recently Gold managed to break above the resistance at 1135.
Currently gold is moving along a steep rising channel and next resistance level lies at around 1165 (previous regional high on 23/8/15).Above 1165 there is heavy resistance at 1180 level.

Currently as we explained in a previous post(Gold: Ready to make a move?), we remain neutral about gold. Below we describe a bullish, a neutral and a bearish pathway for gold depending on the price action at different important levels:

A)Bullish scenario
Gold retraces towards the lower channel line near the support line of 1136 where it bounces and moves above 1167 level towards 1175-1180 (channel resistance and heavy horizontal resistance) where it will probably correct towards 1160-1165.A break above 1180 level can be a very bullish event.

B)Neutral Scenario
Gold breaks below the channel support and horizontal support at around 1136 and then after a small pause moves towards 1110

C)Bearish scenario
Gold moves below 1110 after forming a Head and Shoulders (three black wedges).This formation points towards 1100.A move below 1110 is a significant bearish event.A move below 1090-1095 will be a very bearish event for gold 

Gold: Ready to make a move?

Gold after bouncing at resistance zone of 1155-1160(Gold at resistance zone) moved downwards towards support at 1105$.Currently Gold is lying between 2 support and 2 resistance zones(green and red lines respectively).

At this point Gold is in an established long-term downtrend (beneath 200 SMA).Short-term Gold is neutral.In order to establish a new uptrend or confirm the current downtrend gold needs to move above 1155-1160 resistance zone or below 1075 support respectively.

We believe that a significant move of gold price is in the cards.As we can notice in the weekly Gold Volatility Index chart ($GVZ), gold volatility after bottoming during last summer is now in an uptrend.

Currently we are neutral on gold.Above 1155-1160 gold will turn bullish and the next target will be 1190-1200.

Below 1075 gold will be bearish and next target will be 1025$

Gold at resistance zone

Gold recently managed to break above 1130$ and move towards the strong resistance zone of 1155-1160$.Probably Gold has just finished a 4th wave.It is now lying just below a strong resistance zone and is getting overbought(RSI(14) 69) .IF gold manages to break (and remain) above 1160 then the current count is dead and a possible next target will be 1200-1210$.This will be the last line of defence for the bears.

Same picture for miners(GDX).GDX managed to break above 15 but it is still below the strong resistance zone of 17.5-18.IF GDX breaks above 18 then next target will be 20.5 (last line of defence for bears).

  

Gold still Bearish (...but slowly we're getting there)

Recently gold broke up from a trading range around 1090.Regardless of the recent run-up we remain bearish on gold. Currently and as long as gold stays below 1135, it has few possibilities for a longer-term upmove.
We believe that the current move of gold will stall at around 1125-1130 (or lower) and reverse towards 1080 or a bit lower.

We stay with a previous gold EW count(Gold shows further signs of weakness).
Current upmove is probably a fourth wave of a bigger third wave.So probably, gold will retrace towards 1080 or lower in a fifth wave:

Same picture for miners (GDX):Probably the current upmove will fade at around 14.8 and reverse towards recent lows (13.0) or even lower.After that, a strong bounce (fourth wave of current downmove from January this year) will probably kick in.

GOLDEXIT

Recently Gold and Gold Miners were heavily hammered.
2 weeks ago we wrote about the current move of gold predicting a move towards 1190-1110 (Ready for a Goldexit?)
Currently Gold paused temporarily at 1190-1110 level.
Although we believe that continuation of the downmove is very much probable, bulls will have a last chance if we see an immediate move above 1135 level.

Regarding miners GDX, we wrote 1 month ago that there was a good possibility for a -35% move of GDX towards 11(Another 35% fall for Gold Miners(HUI,GDX)).

We still believe that GDX is moving towards 11-ish.
Last chance for bulls a quick move above 15.5-16.

Ready for a Goldexit?

Gold broke down the minor support zone at 1175 and bounced at 1160 as we correctly predicted (Gold shows further signs of weakness).

Currently gold price hovers around support at 1160.

If gold moves below 1160 then probably 1135-1140 support zone will not hold leading gold towards 1090-1110.

Similarly GDX is moving towards 17.If GDX moves below 17 then probably it will gravitate towards 14.5-15 

Gold shows further signs of weakness

Gold didn't manage to break the resistance zone of 1190-1200 and now is moving towards a minor support zone at 1175 which is another proof of gold price action weakness.

We believe that 1175 level is a weak support and probably will not hold.In this case gold will probably move initially towards 1160 where there is some support and if it breaks towards 1140.

The big picture for gold remains bearish.

Another 35% fall for Gold Miners(HUI,GDX)?

Gold Miners (HUI, GDX) are currently confined between a major descending trendline from 2011 and a major support at 150(HUI)/17(GDX)

Soon something must give way and if our current Gold EW count (Is Gold starting a Major Decline towards sub-1000$?) is correct a possible scenario could be the following:

If Gold Miners break the 150(HUI)/17(GDX) support then the next major support is approximately 35% lower at 100(HUI)/11(GDX).
  

Is Gold starting a Major Decline towards sub-1000$?

Back in late April(Gold and Miners ahead of FED meeting) we suggested the following pathway for Gold

Recently Gold completed the C wave of an ABC correction and we believe that currently is in wave 1 or 3 of 3.If Gold confirms our case we are about to witness a major decline of gold towards 1070-1060$.Immediate targets 1162$ and then 1122$.

If we are in a third wave then probably we are going to see Gold initially at around 1070 and then maybe even 930$
Currently Gold can invalidate our scenario  if it moves above 1190$

Gold near crucial pivot

A quick update today:

Gold is approaching the current crucial pivot of 1170$
If it breaks below 1170 then 1130$ is a very possible immediate target.
GDX (Gold Miners ETF):Crucial pivot @ 18,4$.If it breaks below then 14,8$ is a reasonable target  

Gold ready to move towards 1250?

Gold is currently forming a descending broadening wedge which according to Bulkowski (http://thepatternsite.com/dbw.html) 79% of time leads to a breakout (upmove).So we stay with our previous (Gold and Miners ahead of FED meeting) view...

Gold and Miners ahead of FED meeting

Gold did not form a rising wedge and instead it proceed to form what it seems like a trading range between 1180-1215.
However 1240-1250 remains the key level.Above that level bulls start to have chances for a substantial upmove.Our view is that Gold will move (especially after yesterdays upmove) towards 1240-1250 where probably it will bounce and (?)reverse.

Regarding Gold Miners ETF (GDX) we stay with our scenario(Gold:a fake Inverted H&S, a rising wedge and at the end a very bearish III(3) for GDX?) for an upmove towards  21-21,5 where probably it will bounce.

Don't forget we are just ahead of FED meeting and short term volatility for gold will increase substantially. Be ready to readjust your views after FED meeting tomorrow.

Gold:a fake Inverted H&S, a rising wedge and at the end a very bearish III(3) for GDX?

Gold seems like forming an inverted H&S formation (blue rectangle) that we believe it is a fake one .On the contrary we believe that gold is possibly forming a rising wedge (usually a bearish formation) pointing to around 1240$ where there is a resistance zone.

Gold Miners (GDX) formed a triangle that we believe (70%) it will break up  (fake move?) towards 21-21,5 where probably will bounce and reverse

A possible very bearish EW count

Gold Miners: A possible EW count suggesting major break down

As we noted in a previous post(Gold and Miners:A temporary bounce?) Gold and Gold Miners (GDX) bounced at resistance zone of 1200-1210 and 20-20,5 respectively.They are moving now downwards possibly towards their support zones at 1140-1150 and 17-18 respectively.

A possible GDX Elliot Wave count suggests a break down of support zone and a move towards 7,5-10$.

A scenario like the above is in accordance with our old view(March 2014)(A deja vu for SPX ?) that major equity index- SP500 will top at around 2000 and then slide to a new bear market.
et tempora quidem ante erit difficile...

Gold and Miners:A temporary bounce?

Gold bounced hard at 1140$ and is moving higher.Now it is just under a resistance zone at 1200-1205$ where probably will not penetrate and move lower, maybe to test again 1140 level.

Same picture for miners (GDX) ETF. It bounced at the extremely important support of 17-18 (Will Gold miners form a triangle?) and is now just below a resistance zone at 20-20,5$.It also filled the gap of early March(blue circle).We believe that GDX at current levels or a bit higher will bounce and move lower again.

To summarize, we lean bearish towards Gold for the following days-weeks    

Gold and Silver ready for a bounce?

Gold is probably ready to bounce from current levels towards 1240-1255.Daily RSI is currently at around 40 providing a support level from which gold can bounce towards RSI 60.For the following days we believe that gold will move in a trading range between 1190-1255$

Same picture for Silver.Probably it will move between 15,75-17,75$

Gold turning bearish again?

Gold fell below 1235-1245 support zone(now resistance).Last hope for bulls the ascending trendline from November 2014 and the weekly RSI support zone of 40-45.