{"id":112670,"date":"2017-09-12T00:35:15","date_gmt":"2017-09-12T04:35:15","guid":{"rendered":"http:\/\/countingpips.com\/?p=112670"},"modified":"2017-09-11T19:39:35","modified_gmt":"2017-09-11T23:39:35","slug":"gold-continues-toward-its-breakout","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/09\/gold-continues-toward-its-breakout\/","title":{"rendered":"Gold Continues Toward Its Breakout"},"content":{"rendered":"
September 12, 2017<\/div>
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By The Gold Report<\/b><\/p>\n

Source: Clive Maund for Streetwise Reports<\/em> \u00a0\u00a009\/11\/2017<\/a><\/b><\/p>\n

Technical analyst Clive Maund charts the relationship between gold and the U.S. dollar.<\/p>\n

Gold continues to build towards its breakout from a massive 4-year long
\nbase pattern. This is likely to occur when the dollar breaks down from
\nits topping pattern, and is expected to lead to a bull market that will
\ndwarf the last one from 2001 through 2011, and may be given a tailwind
\nwhen the cryptocurrency Ponzi scheme implodes. In some quarters gold is
\nbeing described as having broken out already, as are gold stocks, but
\nthey haven’t yet, as we will see, and we will also look at evidence that
\npoints to the probability of a short- to medium-term dollar bounce and a
\npullback in the precious metals sector before the big breakout occurs.<\/p>\n

On gold’s 10-year chart we can see its fine giant 4-year long
\nHead-and-Shoulders bottom approaching completion, with the price rising
\nup in recent weeks to the broad band of quite strong resistance at the
\ntop of the pattern, partly due to tensions over North Korea. These are
\nexpected to ease, which will make a short-term correction back more
\nlikely. Before leaving this chart note the volume build on the rally out
\nof the Right Shoulder low of the pattern, and the strength of the
\nvolume indicators shown, especially the Accum-Distrib line, which rather
\namazingly is already at new highs. This certainly bodes well for the
\nlonger-term outlook.<\/p>\n

<\/center>Over the near-term, however, various factors indicate that the
\nprobability of a reaction back is high. On the 6-month chart we can see
\nthat last week the price rose up to the top of its uptrend channel where
\na prominent “spinning top” candlestick formed on Friday, with the RSI
\nindicator critically overbought, making it likely that gold will react
\nback at least to the lower boundary of this channel. The overbought MACD
\nand sizeable gap with the moving averages also increase the risk of a
\nreaction.<\/p>\n

<\/center>Like gold itself, gold stocks are preparing to break out of a giant
\n4-year long Head-and-Shoulders bottom. They are still quite a way from
\nhaving broken out, as we can see on the 10-year chart for GDX shown
\nbelow, and vulnerable to a near-term reaction on a dollar rebound, that
\nshould not see them lose much ground. The big volume on the rally during
\nthe first half of last year showed that the bottom was in and that a
\nmajor new bull market is in prospect. The formation of the Right Shoulder
\nof this H&S bottom served to correct this strong advance.<\/p>\n

<\/center>
\nA big reason for gold to react back again soon would a rebound by the
\ndollar, which is made more likely by the fact that a lot of commentators
\nare reading it its “last rites”\u0097it’s not that they are wrong, it’s
\njust that there are a lot of people of one side of the boat now, so they
\nmay prove to be wrong short-term but right longer-term.<\/p>\n

We will now look at some of the big reasons that the dollar could rally
\nsoon. On the 8-year chart for the dollar index we can immediately see
\none of them\u0097the dollar has now arrived at the lower boundary of a
\nlarge Broadening Top pattern in an oversold state, and while it is
\nbelieved to be destined to break down from this pattern in due course,
\nit looks likely that it will bounce of its lower boundary over the
\nshort to medium-term to correct the oversold condition before going on
\nto break down later.<\/p>

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<\/center>Another important factor suggesting that the dollar is likely to rally
\nshort-term is the latest dollar Hedgers chart, which is now quite
\nstrongly bullish. On this chart we see that large Commercial Hedgers,
\nwho are almost always right, have cashed in nearly all of their net
\nshort positions for a nice fat profit, so that they are now at a very
\nlow level, and they would be unlikely to do this if the dollar was set
\nto drop much further. On this chart we also have the benefit of seeing
\nwhat happened to the dollar soon after they did this on earlier
\noccasions. As we can see it usually rose.<\/p>\n

<\/a><\/center>Click on chart to popup a larger, clearer version.<\/p>\n

Chart courtesy of www.sentimentrader.com<\/i><\/p>\n

Those who think that the dollar will plunge because Nicolas Maduro of Venezuela has announced that his beleaguered country will stop selling in oil in dollars<\/a>
\nare likely to be disappointed. President Maduro would be well advised
\nto look up what happened to Saddam Hussein after he proposed doing the
\nsame, and we must assume that either he doesn\u0092t know his history, or is
\ntired of being president of a failed state and is contriving a way to be
\nforcibly removed from office.<\/p>\n

We have seen how copper, known as Dr. Copper because it tends to lead the
\neconomy and lead the metals, has been in the vanguard of the recent
\nmetals rally. Thus it is interesting to observe on its 6-month chart
\nbelow how it suddenly dropped hard on Friday having become overbought,
\nwhich is thought to presage a dollar rebound and a near-term drop by
\nother metals, like gold and silver.<\/p>\n

<\/center>Conclusion: the long-term outlook for gold couldn’t be better with it
\nlooking destined to break out from a giant 4-year long base pattern to
\nenter a bull market that promises to dwarf the last one, as the dollar
\ncollapses and China (and possibly Russia and other countries) backs its
\ncurrency with gold, and the cryptocurrency Ponzi scheme implodes, with
\nthe liberated funds (or what’s left of them) flowing into gold and
\nsilver. Cryptos got a shock late last week when China reportedly revealed that it was set to close local exchanges<\/a>.
\nFrom China’s standpoint cryptos are a needless risk to its citizen’s
\ncapital, and represent potential competition for its future
\ngold-backed yuan, albeit not for any intelligent person, and are a
\nnuisance that it can deal with simply by banning them, which as a
\nCommand Economy that can ignore criticism, it has the power to do.
\nNear-term gold is looking set to react back as the dollar bounces off
\nsupport with tensions over North Korea easing as the U.S. has no choice but to
\naccept that North Korea has graduated to the nuclear club, even if it
\ncannot be described as one of its august members.<\/p>\n

Clive Maund<\/i><\/a> has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.<\/p>\n

Want to read more Gold Report<\/i> articles like this? Sign up at www.streetwisereports.com\/get-news<\/a> for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews<\/a> page.<\/p>\n

Disclosure:<\/b>
\n1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
\n2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer<\/a>. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.<\/p>\n

Charts provided by the author.<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

By The Gold Report Source: Clive Maund for Streetwise Reports \u00a0\u00a009\/11\/2017 Technical analyst Clive Maund charts the relationship between gold and the U.S. dollar. Gold continues to build towards its breakout from a massive 4-year long base pattern. This is likely to occur when the dollar breaks down from its topping pattern, and is expected […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-112670","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/112670","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=112670"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/112670\/revisions"}],"predecessor-version":[{"id":112678,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/112670\/revisions\/112678"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=112670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=112670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=112670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}