Gold & Silver Signaling Extension to Rallies

11/22/14 Weekly Re-Lay: “Gold & Silver have rebounded since plummeting into intermediate cycles on Nov. 3–7thwith Gold reaching the lower end of its primary, 3–5 year downside target (1127.0–1132.0/GC) while Silver bottomed out just above its respective target (14.650/SI).

That low created a ~4-month high-high-(low) Cycle Progression and a 22-week low-low-(low) Cycle Progression, setting the stage for an intermediate rally.  It was quickly validated by daily 2 Close Reversals & a resulting daily 2-Step Reversal… as part of a 2-week rebound that has a few interesting characteristics:

— Gold’s rally took it up to weekly resistance while peaking just shy of monthly resistance.

— Gold’s rally mimicked its preceding Oct. rebound – in time & price (14 days & ~75.0 points versus 15 days & ~72.0 points in October)… and peaked exactly 1 month later (Nov. 21 & Oct. 21).

— Silver’s rally exceeded its October rebound, in time & price.

There is also another important distinction, when comparing Gold rallies.  The rebound in October lasted long enough – and rallied far enough – to twice neutralize Gold’s weekly downtrend.  It also allowed it to reach the upside objective for that rebound.  All those factors spurred a reversal lower and projected a drop to new lows.

While it could (accurately) be argued that the October rally showed more strength – on a near-term basis – there is a flipside to that.  Gold’s current rally has not reached the same level of overbought sentiment & indicators, so it has a better potential for reaching higher levels before dropping to new lows (even if a brief pullback intervenes).

The similarity in rebounds, test of resistance levels and potential for a 30-degree high-high cycle do argue for an initial high (now), so a quick drop could be seen…”