Gold seasonal uptrend and what to watch for by Bill Downey

INTRA-DAY NEWSLETTER ~ Aug 12 2014

Gold chart

The upper and lower channel lines represent the current momentum of gold and lower is support and upper is resistance. As long as we are above te lower channel line the trend is up on the shorter term. The upper line resistance is around the 1330 – 1333 area and is the key resistance we need to overcome to open up 1342-1355. Other important resistance is our weekly number at 1322 (1322-1326). We need a weekly closing above these numbers. On the support side we have the key support at the lower channel line near 1294 and the green moving average at around 1300. So 1294-1300 is where we want to hold for the short term trend. Weekly/Monthly support is the 1272-1282 price area. A close below 1272 would suggest that things have changed and our expectation of seasonal uptrend into September would come in question.

Traders corner

The chart below is what we have been using since July for subscribers and our outlook. The ideal low planned was 1280 and the low turned out to be 1281 on Dec Futures. Our recommendation to go long at 1284.50 was filled and subscribers remain long on that position. There are three key area’s for profit taking on these trades for consideration. The 1322 area is the first, the 1350 area is the 2nd and the 1390 area is the 3rd. From a recommendation standpoint, goldtrends suggests selling 1/3 at each price point and for those holding only one contract, the current strategy is to sell when we arrive at the next short term cycle turn near August 24th (plus or minus 72 hours). Lets go to cycles.

Cycles

We have two scenario’s. The chart below is Scenario #2 (The dual cycle inversion). If this scenario is correct a sharp rally into the week of August 24th is favored. If this scenario is INCORRECT then scenario #1 (not shown) has gold peaking now in the next 24 hours and from here we will expect lower prices into August 24th. The cycle window closes tomorrow and any new high above 1333 will favor that Scenario #2 is in play and higher prices into August 24th will be the odds favored outcome. Any close below 1272-1282 would REVERSE gold’s uptrend and lower prices would most likely follow. In summary, we get above 1333 area and odds favor higher into the week of Aug 24th. But is there anything that we should worry about? Yes ----- and that’s on the next chart.

Silver

It is very rare that gold stages a rally without silver on its coat tails. Look how silver can’t get above the green 200 hour moving average. This is very worrisome and it leaves open the POTENTIAL that the downside can still be selected in the new short term cycle that has started or is about to start. Any close below 1968 favors lower for silver. Resistance is 2013-2030 and 2068-2075. Support is the 1975-1985 area. If we close below then 1943 becomes the next support target on the short term.

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