Gold Has Finally Cleared Major Resistance – Time for Liftoff

Our research team authored an article on April 24, 2020, suggesting Gold would have to clear a major resistance channel/arc before any further attempt at a rally would take place.  You can read that article here.

At that time, we expected this resistance channel to contain gold prices for a short 10 to 14+days before a bigger upside price move was going to begin.  You can see from our original charts that we believed the resistance channel would be broken fairly quickly.  Yet, Gold has continued to trail moderately lower as the US stock market has continued to rally and the US Fed has stepped up their support and is buying up all sorts of debt and assets.

ORIGINAL APRIL 24 DAILY GOLD CHART

CURRENT DAILY GOLD CHART

Comparing the original chart to the current Daily Gold chart, below, you should be able to see how the price has now established a base above the GREEN ARCING resistance channel that we believe is the final hurdle before Gold attempts a move to levels above $2100.  Although Gold has yet to really start a massive upside price rally, at this point we believe the big move higher could start at any moment.

The US Fed has continued to warn that the recovery process may be full of unknowns and risks.  The global markets are going to react to what happens in the US markets and Q2 data is just a few weeks away.  We believe precious metals are poised to make another 10% to 20% upside price move that may initiate at any moment.  All it takes is a push away from these consolidation levels to put Gold an Silver back on the radar for traders.  Once traders see the move start – they will pile into the rally just like they always do as many people expect Gold to rally above $2500 before the end of this year.

Gold prices must move upward to levels above $1825 to confirm a new bullish trend or downward below $1630 to confirm a new bearish trend.  See the highlighted GREEN and RED rectangles on this Gold Daily Chart.

CURRENT WEEKLY GOLD CHART

This current Weekly Gold chart shows how the price has stayed glued to the GREEN Fibonacci Price Amplitude Arc and how clearly these levels act as real resistance or support.  The Weekly Gold Chart already confirms the Bullish price trend for Gold and supports the $1630 Bearish Price Trigger Target for any move to the downside.  In other words, Gold would have to fall below $1630 to qualify as entering a new bearish price trend.

The next upside move in Gold and Silver could start at any moment  The current support level in Gold suggests $1680 to $1700 is strong support and all it would take to start this next big move is a sprinkling of “fear” to start a precious metals greed cycle again.  How that happens, normally, is that the general stock markets move into a declining price phase on economic weakness or poor earnings data (or worse) and traders suddenly watch Gold rally up 5 to 7% fairly quickly.  At that point, traders begin to focus on the metals and the fact that we are just about $200 away from new all-time highs.

It won’t take much to push Gold into the $2100 level and once that happens there will be talks of $5000, $10,000 – even $20,000 gold prices.  Watch for the next sign of real weakness in the US stock market (possibly a breakdown event or some other event) and watch for Gold to attempt to rally above $1775.  That would be a pretty good sign that the upside price rally in Metals has initiated.

Ride our coattails as we navigate these financial markets and build wealth while others watch most of their retirement funds drop another 35-65% during the rest of this financial crisis going into late 2020 and early 2021.

Subscribers of my Active ETF Swing Trading Newsletter had our trading accounts close at a new high watermark. We not only exited the equities market as it started to roll over in February, but we profited from the sell-off in a very controlled way with TLT bonds for a 20% gain. This week we closed out SPY ETF trade taking advantage of this bounce and entered a new trade with our account is at another all-time high value.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we are about to issue a new signal for subscribers.

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.