Gold's Long-term Turning Point is Here / Commodities / Gold & Silver 2020

Historical precedentsare in many a technician's toolbox – and it's a tool they reach for withsuccess repeatedly. Does the yellow metal offer any interesting parallels?

Gold had declined andit recovered, but the above simply prolongs the 2008-2020 analogy; it doesn’tinvalidate it. Today, gold is attempting to break above the previous highs, butit’s not being successful in that.

Gold topped about adollar below the May high and just like it was the case in May, and in April,gold quickly moved down from these levels. Goldfutures are at $1,756 at the moment of writing these words, whichmeans that gold invalidated the small breakout above the declining resistanceline that’s based on the April and May highs.

This is a bearishsign pointing to the repeat of the pattern – gold is likely to once againdecline from the current levels to at least $1,680 or so. The emphasis heregoes on “at least” as given the bearish support from the media (spreading the coronavirus fear) and the short-term breakout in the USD Index.

The resistance line,above which gold tried to break and the rising support line based on the Marchand June lows cross more or less in the first days of July. The triangle-vertex-basedreversals have pointed to many important tops and bottoms in therecent weeks and months, so perhaps the above-mentioned target date will be thedate when gold finally bottoms. If gold slides from here this week, the abovewill become the most likely outcome.

Speaking of targetdates, there’s also another very important target date, which is likely totranslate into an important reversal.

It’s more or lessright now, and the technique that is applied here is gold’slong-term turning point.

Until the 2011 top, these turning points were tops,and after the 2011 top – in each case – these turning points corresponded tomajor bottoms. We marked them with vertical, solid, gray lines.

The above means thatthe upcoming turning point had a slightly bigger chance of being a localbottom, but the most important thing is that there is likely to be some kind ofextreme regardless of what type of extreme it is (that’s the key differencebetween turning points and cycles – the latter have tops and bottoms after each other, while turning points couldwork in either way).

This means that whatwe saw earlier today might have been much more than just a temporary attempt tomove higher. It might have been a major long-term top after which gold is goingto slide in a profound manner.

Since the slide ingold is not likely to take long, but rather be relatively quick (similar towhat we saw in March, and similar to the final slide that we saw in 2008), itcould be the case that both the major top, and the major bottom will be closeto the turning point. That’s exactly what happened in 2011, which was also theonly time when gold was trading above $1,500 during the turning point.

Back then, goldplunged almost $400 in less than a month. Since this kind of decline followedsomewhat similar technical development, it’s not out of the question that a bigand sharp move could happen also in the following 1-3 weeks.

The above alsosuggests that our “crazy downside targets” are not so crazy after all.

Cup and Handle inProgress?

Naturally, the long-term outlook remainsextremely bullish, especially given the possibility of seeing a cup-and-handleformation in gold. The 2011 – now price movement could indeed be the “cup”.Generally, the bigger, more symmetrical, and rounder the “cup” is, the moreprofound and more bullish the implications are.

There is, however, something that’smissing from the pattern… We have the cup, but we’re missing the handle!

The decline in gold which we wrote aboutpreviously would serve as the perfect handle for the massive cup that goldformed in the previous nine years. That’s in perfect tune with what we’ve beenexpecting for gold anyway – we have been expecting one final slide before themove to new highs, and we would like to stress that getting it would notinvalidate the long-term bullishness at all. Conversely, it would confirm itthrough the cup-and-handle pattern. 

Thankyou for reading the above free analysis. It’s part of today’s extensive Gold& Silver Trading Alert. We encourage you to sign up for our free goldnewsletter – as soon as you do, you'll get 7 days of free access to our premiumdaily Gold & Silver Trading Alerts and you can read the full version of theabove analysis right away. Signup for our free gold newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Toolsfor Effective Gold & Silver Investments - SunshineProfits.com
Tools für EffektivesGold- und Silber-Investment - SunshineProfits.DE

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