Gold is on day 23 which is too early in the timing band for a daily cycle low. 30 to 50 days would be normal. I think what you are seeing is a half cycle low. A half cycle low will cause the 3 day RSI to become oversold which it has. Price has dropped into the 1700 area which has served as resistance multiple times in the past but will now likely serve as support.
Half cycle lows serve an important function. Besides becoming a potential place to add a position, they allow us to construct the daily cycle trend line. This will become important later as I will explain in a bit.
Gold has been in a very long basing pattern since the all time highs in 2011. Gold made multiple attempts to re-gain the highs in 2012 but all failed at 1800. Again 8 years later we find gold knocking on the door of 1800. We are probably entering the second half of the daily cycle. It will be very unlikely that gold can break through 1800 in the later stage of a daily cycle.
Gold is in the first daily cycle in this intermediate cycle. Though I don't think gold can break above 1800 at this time, I do think there is a good chance we break through on the second daily cycle. Once that happens it will probably be a quick trip back to the all time highs at 1923.
A 40 day cycle would mean we would see gold bottom around May 11 probably near the 1700 support area. At this point we would begin a new daily cycle. With sentiment levels re-set early in a daily cycle I think there would then be enough energy for gold to reach the all time high of 1923. At that point we may have to endure an intermediate cycle decline before we break out to new all time highs.
For now, you could take a long in gold around 1700 with a stop just below that area and just plan to exit the trade at 1800. a 100 point gain in futures is worth $10,000. There are micro gold contracts (MGC) as well that are 1/10 the size just like the index funds many here are trading. There is also SIL which is a silver contract that trades at 1/5 the size of a silver contract.
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