Gold & Dollar Trading: When is Likely Time for Next Surge in Gold? What is 7-Week Cycle Projecting??
07/24/19 Weekly Re-Lay Alert: “The Dollar remains a primary focus during 2019, expected to see developing weakness – even if it is initially masked by price action of the Dollar Index (which is bumping up against the highs it set in Nov./Dec. ’18 and is below its April/May ’19 secondary peak).
It has repeatedly tried to break into the upper third of its 2 – 3 year trading range, but has continually failed to do so (98.50 – 103.65/DX is the upper third of that range). On an intermediate basis, the opposite has been the case. The Dollar Index has sold off repeatedly but failed to break below the upper third of its 1 – 2 year trading range.
The overall perception is still that the Dollar Index is completing (or has completed) a ‘2’ or ‘B’ wave rebound and will subsequently enter a corresponding decline. That is corroborated by the correlated action in multiple Dollar-related (directly or inversely related) vehicles.
First, there is Gold which bottomed in Dec. ’15. It has headed progressively higher since then and entered a second major advance in Aug. ’18.
So, on a relative basis, the Dollar has lost value against Gold for over 3.5 years.
Another anti-Dollar instrument (‘currency’) is Bitcoin, which has just dipped below the upper third of its 12 – 15-month trading range. Despite the magnitude of its 2018 collapse, Bitcoin’s June ’19 monthly close was the second highest monthly close in its entire history. Dec. ’17 was the only higher monthly close.
As of the July 12 weekly close, Bitcoin only had 7 weekly closes – in its entire history (one of them being on June 28, ’19) – that were higher.
If one was to shave off the price action of Nov. ’17 – Mar. ’18 and Nov. ’18 – Mar. ’19 (the opposing extremes when the pendulum swung too far in each direction), the charts would reveal a very steady and convincing ~4-year uptrend for Bitcoin. Since it generally trades at opposition to the Dollar, Bitcoin reveals another concerning sign for the Dollar.
Asian currencies are also revealing a different reality (than what the Dollar Index shows). The Yen set its low in Nov./Dec. ’18, which was merely a retest of its Nov. ’17 low, which is well above its Dec. ’16 low. It remains in a weekly uptrend and is trading in the upper third of its 6-month trading range. From a Dollar-inverse perspective, that Yen strength is revealing developing Dollar weakness for 2 – 3 years.
Then there is the Yuan, which bottomed in Nov. ’18 and set a higher low in Jun. ’19. Since this is far more manipulated, and has been used as ammunition in the ongoing trade war between the US and China, it cannot be viewed as objectively. It has remained in lower third of its ~2-year trading range since the Nov. ’18 bottom.
Closer to home, the Canadian Dollar bottomed in Dec. ’18, while remaining above its May ’17 low (which was above its Jan. ’16 low). In other words, it has been holding support for over two years.
The CA$ set a secondary (higher) low in late-May ’19 and rallied into July but remains in the bottom third of its 3-year trading range. However, on a slightly broader perspective, it is in the middle third of its 4-year trading range and the upper 20% of its 2019 trading range.
The point of all this is to illustrate that there is some serious weakness developing in the Dollar – from multiple perspectives (some below the radar). However, just like the roller-coaster analogy conveys, a true Dollar sell-off will not materialize until [reserved for subscribers]…
And that could be, and likely will be, when markets like Gold and Bitcoin enter their next bullish phases and see new sharp advances…
Gold & Silver are mixed with Silver spiking to new highs (but closing right at the level of its July 19 high) while Gold remains below its July 19 and June 25 peaks. It would not turn its daily uptrend to neutral, however, until a daily close below 1412.2/GCQ. Until that occurs, the trend remains up.
The XAU remains the most bullish and is reinforcing its underlying strength and the cyclic potential to extend this rally into Aug. ’19. A test of 95.00/XAU is possible this week. The XAU has retested its Sept. ’17 & Jan. ’18 highs (92.95 – 93.38/XAU) and would need to give a weekly close above that range to elevate this advance.”
Gold remains in multi-week consolidation under pressure from June/July ’19 cycles. August ’19 should usher in new phase of cycles – when culminating surges are likely. Successive peaks expected to hold for shorter periods of time as metals accelerate into a projected 3Q ’19 peak. Silver, Platinum & XAU concur, with rallies projected to last into/through Aug. ’19. XAU monthly trend signal is also crucial, with focus on Aug. 30.
When is Next Intermediate Cycle Peak in Gold?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.