Let’s update the counter-cyclical metal with the excellent risk/reward but as yet inactive big picture bullish technical situation.
Gold daily took the war bid and popped to the November high and is now on a small pullback. Former resistance in the 1830s is now key short-term support, as is the convergence of the moving averages at 1808-1812. RSI and MACD look constructive. It really is a good thing that they did not pump gold too aggressively with the war drums canard.
Let’s dial in a weekly chart that shows the handle to the longer-term Cup. The handle has now taken on a bull-flavored look to it. If it takes out 1880 and then 1920 the technicals will be targeting a new high. Again here, RSI and MACD are positive, constructive and not overbought.
And then there is the monthly chart, with which we originally projected a handle to be made for the Cup that made a nice higher high in 2020. Again, RSI and MACD are positive. In this case they are sloping downward and working off the overbought hysteria of 2020. The handle has consistently seen declining volume, which is a characteristic of a bull flag.
As the inflation slowly eats away at the economy while the Fed is forced into hawk mode it appears that fundamentally gold’s time is coming as well. Our upside target is 3000+, with no clear timeline on that. But the projection is that 2022 will see the start of the next leg upward, which is why the bull gateway on the first chart above is so important.
I am the guy not to be waving pom poms at the gold “community”. But I also don’t want to be the guy who forgets about our original bull plan that has been a long 1.5 years in the making, first with the formation of a necessary consolidation handle and then a projected ‘next leg’.