Gold Price Uptrend Confirmed, 34-Day Cycle Coming Due

Last week's action saw gold forming its peak for the week in Monday's session, here doing so with the tag of the 1256.60 figure (February, 2019 contract). From there, a gentle correction was seen into late-week, with that decline coming as the result of a smaller 10-day component - though with the upward phasing of the larger 34 and 72-day cycles seen as pointing higher at the present time.

Gold Timing Index (update)

With the action seen last week, of particular note is that our gold Timing Index has recently pushed back to higher highs - along with price action - which is seen as a net positive for the metal. Here is our chart of this particular indicator:

The Gold Timing Index is our main indication of trend direction for the medium-term, with the Gold/CPI ratio being our longer-term indication. As noted in past articles, the last signal from our mid-term indicator was seen following the February, 2018 price peak, coming on February 8th, 2018, with the metal trading at the 1346 figure at that time.

Going further with the above, since no intervening buy signal has been given with the Gold Timing Index, the last mid-term sell signal is actually still in effect - and we are more likely to get another mid-term sell signal before any new buy signal appears.

The Gold Cycles

Even with the mid-term trend seen as pointing south from February of 2018, the smaller-degree 34 and 72-day cycles have been deemed to be pointing higher, ideally holding up into later this month. Here is the smaller 34-day cycle:

Of note is that the larger channel that encompasses the much bigger 154-day component is still pointing higher at the present time, an assessment which favors the next downward phase of the smaller 34-day component to end up as a countertrend affair. In terms of time, the next trough for that 34-day wave is due around the first week or so of January.

For the much shorter picture, in our Gold Wave Trader report last week we noted that a minor cycle downward phase was due to materialize with the smaller 10-day wave, with the decline phase of this component now seen as in progress:

In terms of price, we noted that a decline back to the 20-day moving average was likely to materialize (due to a larger, but less dominant 20-day cycle), which we seen with the action into Friday. With this 10-day wave now at 12 trading days along, it is at or into normal bottoming range, and we should be looking for its low to soon form.

Stepping back slightly, the three cycles above the 10 and 20-day waves are each seen as pointing higher at the present time, and with that we should look for the current 10-day downward phase to end up as a countertrend affair - which means that gold should remain above the 1216 figure (February, 2019 contract), which is the prior 10-day trough.

Stepping back further, if the above is correct - and the current downward phase of the 10-day cycle is able to end up as countertrend - then the probabilities will favor a push back to or above the 1256.60 swing top on the next upward phase of the 10-day wave. That move would then be the odds-on favorite to peak the larger 34-day wave, for a correction into the first week or so of January. We have several key turning point dates coming up in the next few weeks, which we make particular note of in our GWT report.

For the stepped-back view, the next mid-term peak should is expected to come from the bigger 154-day cycle, which is shown again below:

In terms of price, the expected magnet for the 154-day cycle called for a rally back to the 154-day moving average, which has obviously been hit with the recent action. The upward phase of this cycle is likely to peak either with the current upward phase of the 34-day cycle, or else on the one that follows, following the expected decline into early-to-mid January. Right now it is too early to tell with any degree of certainty. Until then, it would take a reversal below the 1203.00 figure (February, 2019 contract) to confirm this 154-day wave to have topped.

Gold's Bottom Line

The bottom line for gold is that a short-term correction phase is seen as in force with the smallest-tracked cycle, the 10-day component. The ideal path would be for this decline to end up as countertrend, to be followed by higher highs on the next swing up - then to be on the lookout for technical indications of a peak forming with the larger 34-day component, and - potentially - the even-larger 154-day wave.

U.S. Stock Market Update

For a quick update on the U.S. stock market, the last short-term upward phase was favored to see a rally back to the 70-day moving average or higher on the SPX, though that move was anticipated to end up as a countertrend affair:

On the chart above, we can see that the SPX came within earshot of hitting the 70-day moving average into the 2800.15 swing top, with that move up ending as a countertrend affair - and has since been followed by a break back to new lows for the larger swing.

Stepping back then, the break back to new lows (below 2603.54 SPX CASH) was anticipated to occur, with this decline expected to eventually trough the larger 180 and 360-day cycles, at some point between the current month of December, and February of 2019. While this is a wide range, this is a normal average variance for the 180 and 360-day cycles, with the smaller 180-day component shown again on the chart below:

In terms of time, the next key date of interest is the January 17th, 2019 turn with the Bradley indicator. In terms of price, a decline back to the 360-day moving average was expected to play out in recent months, originally noted several times in articles on this website back in the Summer months. Going forward, the next key price range is the 2550-2560 area for the SPX, a range which bears watching in the days/weeks ahead.

For the bigger picture, the key is whether the current correction phase of the 180 and 360-day waves will be able to keep the SPX above the 2670 figure on a monthly close, which is our dividing line with the larger four and nine-year cycles. If it can't, then we will have indications of a much larger-degree correction phase to be in force, one that could last well into the Autumn of 2019 into the Spring of 2020 timeframe. For now, that is speculation, and it will be very interesting to see how the action plays out into year-end. Stay tuned.

Jim Curry

The Gold Wave Trader

http://goldwavetrader.com/

http://cyclewave.homestead.com/

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