Gold and silver have been stellar outperformers the last couple-three weeks. The top watch on the weekly chart continues. Remember, the top is not in until all the indicators negatively diverge. It looked like that was going to happen a couple weeks ago, but after the ECB meeting, when President Lagarde decided to tread water in her Olympics bathing suit, the euro popped higher, and the US dollar dropped like a rock catapulting gold, silver, commodities and the US stock market to the moon. The move is parabolic and look at the last two candlesticks fully above the upper standard deviation band; this never happens. Gold is going to recoil hard like all commodities do.
In the break room, Zack, a novice to trading, was bragging to Emily, the pretty administrative assistant, that he took his entire paycheck and bot GLD at 194. Zack fancies himself as a sophisticated investor and was trying to impress the gorgeous lass. Emily rolls her eyes, shakes her head and walks away telling him that she would never date a man that does not have respect for the neggie d on the weekly.
Despite that wild move to a new all-time record high gold price at 2089.20 and record high GLD ETF price at 194.45, the chart continues to set up with neggie d. The dollar weakness came out of left field. Keystone's 80/20 Rule says 8's usually lead to 2's so a move above 2080 opens the door to 2120. The breach of 1800 opens the door to 2200. For GLD, the move above 180 opens the door to 220. The 198 would open the door to 202.These targets can occur at anytime in the future (maybe down the road).
The chart has that rising wedge vibe. The indicators are in negative divergence except for the MACD line and histogram. The RSI is a tiny bit higher so that provides a sliver of juice for more upside. The RSI, stochastics and money flow are at overbot levels agreeable to a selloff on the weekly basis. The ADX shows that the upside rally move in gold is a strong trend higher since summer 2019. However, as price prints higher highs, note the ADX slightly slipping away, negatively diverging. The Aroon green line is pegged at one hundo with nowhere to go but down which is bearish. The red line is oversold and moving up is bearish.
If both the RSI and MACD are long and strong, it usually takes a double-jog to place the top since one jog is needed to turn the RSI neggie d and another jog to roll the MACD over. However, the RSI is neggie d on the longer-term 7-year basis which creates a dark cloud above the picture. Thus, gold price will likely retreat this month, for a week or two, then back up for a matching or higher high in price a couple weeks after that. If the RSI in the near-term, and MACD, and histo, turn neggie d, the top is in and a multi-week down move begins. It may take down 2 weeks, up 2 weeks, down 2 weeks, up 2 weeks, for the top to be in on the weekly, so that places the top in gold, on the weekly basis, coming up between 3 and 8 weeks.
The market crash in February and March occurred in concert with gold collapsing as well so stay on guard for this behavior. The stock market should fall apart at anytime, and Friday is very likely the top, so gold may retreat right away with stocks. Considering that obscene move above the upper band, gold may come down hard. The GLD middle band target is at 165 and rising. The lower band is also in play at 146 and rising. GLD is extended way above its moving averages so a mean reversion lower is needed. The chart will likely pinpoint the top in gold in a couple weeks but if the stock market begins falling apart in earnest, gold may follow it down.
Right now it looks like gold will drop for a week or two, then rally back up to the highs for a week or two, that places the chart in early September, Labor Day. If that is not the top (MACD must go neggie d), there is likely another jog move needed, so down for a week or two then up for a week or two and the top on the weekly basis would be in September.
If you bring up a monthly chart the parabolic move is astounding. This chart shows a long and strong MACD line but it is neggie d over the last decade. The gold monthly chart will likely top out this year in the September-December time frame, and remember this is on a long-term basis (think months and years).
Let's mix it together. Gold should drop now probably in concert with the stock market. This means the dollar will probably spike higher. Considering that violation with the upper band, GLD could be at 180-185 in a heartbeat. What may happen is as the stock market continues selling off, investors may decide to buy gold which creates the buoyancy and move back up to a matching price high say 2 or 3 weeks out. That would be the top for gold on the weekly basis and then it moves lower with stocks again during September. Gold then will recover again say in October to honor the monthly chart and the long-term top will be placed. Exact timing for all these points in time can be identified as the charts progress.
Keep in mind, however, the gold move is pretty much over. If you made a ton of money, take the profits and scale out. That drop in the dollar creating the parabolic move over the last couple weeks was a big gift to gold bulls. Don't get greedy. Gold may see a one hundo-plus down day in the week ahead.
Keystone is not in any gold trades now. You can probably sneak in a quickie GLD short or GLL long right now if very nimble in the daily time frame. But, as mentioned, price will come back up. Best to wait for that weekly chart above to set up with neggie d signaling time to short GLD and/or long GLL with confidence in the risk/reward; gold will probably top out in the weekly basis later this month. Keystone will likely play that if it occurs. Again, gold may simply drop in earnest from here in tandem with a big pullback in the stock market. Stay alert and nimble and for gosh sake's, if you were part of that gold orgy, it is probably prudent to take at least half or more off the table immediately. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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