Gold Update: Bulls Finally Took The Ball

Posted on by Aibek Burabayev

Aibek Burabayev - INO.com Contributor - Metals


February scored the first point in favor of the bulls breaking the downtrend. Usually, when we get something that we want, after moments of winning euphoria, we start to feel sad about further uncertainty – what is next? To avoid that feeling we should work out a new plan like the one that I prepared for you below.

Chart 1. Gold Monthly: Gold Bugs, How Deep Is Your Love?

Monthly Gold Chart
Chart courtesy of tradingview.com

Speaking globally, the sad thing for the bulls is that we can’t be sure of the Big Bull Run until the price is below the previous high at $1920. I can add more points saying that there is still a chance of a complex correction, which can last longer, much longer. Gold was in an uptrend for 12 years and the current correction took only 4.5 years. Therefore, the probability of its prolongation is high as the correction might last longer the than major trends. It is human nature when we have a clear idea to act decisively and swiftly (trends), but once we fall into a thoughtful mood reflecting of further plans we are losing/taking our time to think everything thoroughly (corrections).

I put the magic Fibonacci retracement levels on the chart to show you the areas of a potential reversal. The 38.2% level was omitted intentionally as I think we should reach at least halfway at $1483 and even the most common 61.8% level at $1586. I will calibrate the levels when we have the first medium term correction to build the AB/CD segments within the red BC segment. In the meantime, we've witnessed the first step to the upside with many more to come, prepare your pockets!

In my very first post this year I used trend angles to show you the strength or weakness of the market, this time, I used it to build possible price developments in the gold market. Physics says, “ the angle of incidence equals the angle of reflection,” therefore I measured the angle of the first drop and put it first to the upside and then to the downside charting a red zigzag. This is an ideal plan with many ifs and whens, which illustrates the global map of price movement. It also shows that the end of the implied correction falls in the year 2025 an “ideal” outcome with a total 14 years of correction. I guess that we should consider +/-3 years of difference.

Chart 2. Gold Weekly: First Upmove Is Underway, Good To Buy On Correction

Weekly Gold Chart
Chart courtesy of tradingview.com

As seen on the weekly chart above the price is still above the broken downtrend as bulls keep kicking it higher. The price has often met a Double Bottom pattern only to reverse to the upside and when the gold broke above the neckline at $1192 the rise accelerated enough to move through the blue trendline beyond $1240. The bottom left's high at $1307 is the target for the pattern.

I drew Fibonacci retracement levels with a zero point at the projected target to show you the area of a potential bounce back. The correction is imminent, but we should wait for the top to be shaped to calculate the actual retracement levels and redraw it on the chart. These levels would work only if the market peaks at the pointed level, which is of course yet to be proved.

So the main idea is to wait for the deep correction and be prepared to enter a long position on a market dip.

Intelligent trades!

Aibek Burabayev
INO.com Contributor, Metals

Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

21 thoughts on “Gold Update: Bulls Finally Took The Ball”

  1. Just after one day from my comment, we find a considerable fall of around 25 Dollar and may try to test a crucial level of $ 1195 .However this is a excellent juncture for short term traders to get both side advantage, but therefor, primary condition is "You must remain bias free, either for Bull run or Bear Face" just take the position for getting short term swing profit.

  2. Dear Aibek,

    Thanks for one more deep analysis.

    As per my view, first of all Double Bottom, as you have pointed, can not be treated as a perfect formation as required, and second thing, even if we allow it, many times, after forming such pattern, we may find Zig-Zag Higher Top, which is higher then last Top but Lower then second last top. So its batter to watch for some more confirmed signals for any sustainable long term Bull Run, only after and over and above $ 1285 $ 1305 and $1340

    1. Dear Rasesh,
      Thank you for the warm feedback and as always valuable comment!
      Best wishes!
      Aibek

  3. I thank you for your insight. However, I cannot read the numbers on the bottom and side of the chart as they are too small.

  4. Thank you for the article, always a good addition for mulling over the situation, and, I enjoy your long-term outlook, as opposed to so many looking short only. 1/2 say up..1/2 say down...many say it's all manipulated anyway, so, who cares?
    As long as there is massive complacency by the gold and silver miners to stay put with the London Exchange, and it's outright shenanigans, there won't be anything but the same ole same ole, that is, the commercials have learned how to make massive profits on BOTH sides of the spot price, with etfs, regular and inverse. The charting manipulation is so obvious, even a newbie like me can read between the lines. The goal for the manipulators is to keep spot at a point where the miners can make a living, but, keep them on their toes, so as not to either create a oversupply or a undersupply of bullion. Drive spot up, then down, and work it both sides. Easy as stealing candy. Status quo, as far as such.
    Any mining CEO's reading this..WAKE UP...you need to be brave, and boycott London, and, crush futures at Comex, or, continue to be a puppet with heavy strings for the rest of your life.
    The outflows from banks, into bitcoin, and the other 25 alt-currencies has elevated the panic-level to critical for old-school systems, which have failed, due to massive overspending and debt..
    My point is, without a total reconstruction of methods of exchange, combined with ponzi-scheme-like paper gold contracts which are worthless and destructive to a normalized spot price, nothing will change. The commercials CANNOT let spot get too high, or, it will overwhelm and destroy the paper system and Comex. These people only profit on synthetic systems meant to be manipulated, pure and simple, and, do not reflect the true price of gold, which should be closer now to 2500/Oz, with current inventories on hand. Price suppression is the norm.
    All it takes is for the miners to boycott, and, game over. It would be in their best interests to create their own trading platform, using alternative currencies other than standard issues,(Dollar, Pound, Yuan, Yen, etc), forcing politics and world debt out of the daily trading. If the switch over was well thought out, and, conceived, it could end the era of trading for greed, and, usher in an era of trading for fair economic prosperity for all involved.
    But, like the tire that lasts 100,000 miles, most likely, will never happen..it's too harmful to the entrenched dark side.
    1 whistle blower from the dark side will end the whole scheme in the blink of an eye. People talk..people have records..people know their life is on the line if they rat anybody out, and, would need full protection and an identity change just to stay alive, so, hush hush the word of the day. The millions made on book sales alone could be enough incentive for someone to talk. Movies. Not the type of situation the 1% want.
    Too bad Edward Snowden worked on the Government side, and not the bullion market side. We need a new Snowden to come forward and tell it like it is. The system is in total denial, not unlike a heroin user strung out and hopeless.
    Power comes with surrender, strange as it seems. Like a person in recovery, admitting one's powerlessness is the first step to recovery. It's getting the socks on that's the hard part.

    1. Dear Carl,
      Thank you for your feedback and multiple-angle view!
      It is really interesting time that we live in.
      In my December posts I highlighted that China, Russia and Kazakhstan add PHYSICAL gold not futures to their reserves as they don't trust paper gold.
      Another challenge is blockchain technology used in crypto currencies which can undermine printed paper money.
      But human mind is so inventive that we will face something absolutely new and different that can change the game the way we can't imagine now.
      So time will tell.
      Best wishes! Aibek

  6. Be very careful about focusing on "target"/charts only.
    Remember to look to the left and right of you and not just down range on target, to avoid be run over by a truck.
    The seasonal gold winds(mega banks and others playing in the market) can knock you off your feet if you focus to much on charts only.
    I am not as experienced as others who have done this for decades, but i have been trading gold for over 12 years and there are other factors to consider then just charts.
    The least risky time to go long is in the summer mouths just before the industrial buyers come into the market to buy.
    Seasonally, this time of year(march-april) is the time to short the gold market and then come back in the summer to go long.

    This has worked for me 7 out of ten times. Doing spreads seems to work best along with this seasonal trade.

    Good luck and good trading.

  7. Great analysis! Just would like to add 2 correction scenarious - optimistic and pessimistic.
    Optimistic - at 50% (1176.55), 65% there would be a reversal ( some kind of bullish candlestic pattern) and the price will start moving up. The bears, who would take short position at around 1300 will panic and the final short coverings will add fuels to the bull case. At this point this is a bull market. And any dip is a buy.
    Pessimistic - the bears will push the price all the way to either 78.1% or even 88.1% or going to make lower lows to trigger stops and take out longs. The reversals will happened at this point but previous bulls will be reluctant to enter long positions since low lows happened and they just experienced loss. This will allow big player took positions and the market will start going strait up without corrections, so there would be no chance to get in on a dip. Usually the dip will happened fairly high at around 1300.
    So lets see which scenario will materialize.

    1. Dear Goodheart,
      Thank you for feedback and your thoughts!
      One thing is most important - the correction shouldn't break below the low and bounce up should be nimble to break up current high.
      Regards, Aibek

  8. Thanks for the in depth long term analysis - much appreciated. I do not understand the `(target for double bottom at $1307)`. Are you talking much longer term that this will become a double bottom ?

    1. Dear Chris,
      Thank you for feedback and the question!
      It's short term and it can reach $1307 soon.
      Regards,
      Aibek

  9. Thanks. I want to hold a small insurance position in my IRA's no matter what
    the charts are saying at the time. Thanks for your your analysis it is always
    excellent!

  10. hi
    I am a professional technical analyst

    Chart 2 Gold Weekly not double bottem
    its broke bottom and when the gold broke last bottem it will
    Continue down to 161% Fibo extension of the highest peak.
    thank you for report

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