2.16.14 “$GLD Why I Think Gold Has Bottomed”
I believe we are seeing the early stage of a major bottoming signals on the precious metals and miners. I am talking MAJOR BOTTOMING signals. Obviously there are still some levels it needs to clear before fully confirming, but I think 2014 will be marked as the bottoming year for the precious metals and miners.
Since my earliest article on Gold in February, we have been keenly watching them with patience to ascertain levels to accumulate and initiate our long positions. We were involved with $SLV for several months, and finally we are starting to reap what we sowed. We have plan to add to our current positions and initiate new positions if applicable as we forecast 200%+ rally next 3 years. Precious metals and miners are much more difficult to swing trade because of their volatility but reward is great if you are able to pinpoint certain levels to enter and exit for longer-term trading (Position Trading: 4-6+ months).
We also have been involved in various miners such as $AEM for few months now and $RGLD recently. Currently in our watch list to initiate long positions (in the near future) are, $GG $GDXJ $PAAS $SAND $GOLD $SSRI. They have also moved very well this week, but instead of chasing it up here, we are going to look for better entry levels after some decent size pullback.
Here are several charts with analysis where we believe the metals and miners can move by 2017, so hopefully, it will be somewhat helpful to your own analysis.
$GLD Target: $325-$375
This is very interesting chart if you look at this bit more intently.
As you can see the corrections we’ve had in late 2006, it was bottomed at 50% Fib. Retracement level (yellow highlighted). Same thing happened in late 2008 corrections. It was bottomed at 50% Fib. Retracement level. Isn’t it interesting to find that current correctional move may be ending in 50% Fib. Retracement level?! Is it just merely coincidence or are these levels where ‘value buyers’ starts to pop in. The investors who wants to buy low and keep it for 2-3 years.
After 2006 corrections, $GLD rallied about 100%. After 2008 corrections, $GLD rallied whopping 150% this time! We believe after this current corrections, We will see 200%+ rally by 2017.
This weekly chart shows very well formed bullish divergence on MACD along with uptrend support that had been held and still being supported by the bulls. Weekly bullish divergence alone is a huge signal of major bottoming signals but when you orchestrate with long-term uptrend support with Fib. levels, it makes the deal that much sweeter.
Even with recent decline on $GLD, buyers protected this long-term uptrend support and bounced. These are very strong bottoming signals as it is also confirming with multiple analysis. I think if we can get well above $135ish, that might be a good confirmation of this major reversal.
How about a monthly chart?
This is a monthly MACD Histogram chart which I’ve customized/configured for strictly calling major tops and bottoms (see yellow highlights) along with full Stochastics crossing from ‘oversold’ status (see red arrows). These signal alone, its meaningless but when it is combined with other analysis I’ve done here, the beauty of technical analysis truly illuminates.
So when this MACD Histogram crosses zero line, it means to pay attention for possible major bottoms.
We all know that Stochastics can stay oversold for longer than we can imagine so it isn’t much but it could mean something if it continues to rise.
$SLV Target: $60
Silver usually follows where Gold goes but it has the proclivities to act more emotionally. So when it goes up, it tends to move much higher than Gold. When it rolls over, it tends to rollover more so than Gold. But as long as Gold stays in an uptrend, Silver should follow.
What I’ve done here on this chart is a Elliott Wave analysis in a massive scale. Elliott Wave analysis isn’t as accurate as Fibonacci analysis, but it gives us some ideas of where the price is possibly headed. You can use Elliott Wave analysis for short-term, but here I’m using in a grand scale.
As you can see, we are now possibly in the phase of making “Wave 5”. Usually Wave 5 is the longest wave out of all other waves 1 through 4, but I’ve drawn “Wave 5” as a equal length to “Wave 4” for this particular analysis. $60 target is 200% rally from today!
I love these signals. These are my favorite sign of major bottoming signals.
Not only we’ve cleared this long-term downtrend resistance on this weekly chart, but MACD is continue to form bullish divergence with blue line crossing today (see arrow). When the price action confirms MACD bullish divergence then the potency elevates to a higher degree.
Ah.. the monthly chart.
Again, this is a monthly MACD Histogram chart for strictly calling major tops and bottoms. Once we start crossing zero line, pay attention! Also this is what we call, “monthly bullish divergence” (see blue line). Obviously the monthly bullish divergence isn’t fully confirmed yet but it’s a start. It needs to get above $23-$24ish for a full confirmation on this monthly chart.
$GDX Target: $75
Late 2008, $GDX bottomed, and it rallied to Fib. Expansion level of 123.6% in about 3 years before crashing in 2012.
If we are truly bottoming here today, I believe we will rally again to Fib. Expansion level of 123.6% which is $75ish. $GDX will pretty much follow Gold’s movement but sometimes, it has tendencies of being one step faster.
Gotta love these weekly Inverted H&S formations. They are a major bottoming signals when it occurs after a steep downtrend (and the important thing about Inverted H&S isn’t about the textbook pattern but the sentiment that it conveys as it have all different kinds of looks). And for the fact that we have this inverted H&S formation along with weekly bullish divergence, double the strength!
We will need to close well above $27.50ish for the 1st stage confirmation, and for the full confirmations, above $30 would do it.
The monthly insinuations with full Stochastics…
When monthly divergences occurs at extreme levels (‘overbought’ or ‘oversold’), definitely something to keep an eye on and pay attention.
I may be bit too early with this article of calling major bottoms like this on Precious Metals and Miners, but I do think its a inevitability that is going to play out in time and we have some great signals to prove that. These metals/miners move in mysterious ways like today. When no-one is paying attention, that’s when it seems to scream. So through this article I wanted to alert you guys so that you may able to catch some good moves when the opportunity arises.
It’s not always easy to trade these metals/miners market because of their volatility so again, the best method is longer-term trade strategy. I always say, “do you want to make small money now or BIG money later?”. So always the big questions are where to enter and where to exit and how long to hold and in that, to have fortitude & faith in your analysis to ABLE to hold through certain climates.
I am a technical trader. I put 90% of my trading decisions on technical data, and some of these signals I have presented before you today are just absolutely phenomenal. This could truly be the once in a lifetime opportunity. I don’t think we are ever going to see precious metals and miners price this low for REALLY REALLY long time.
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Thanks for reading.