Gold reaches 1st weekly target resistance but CPI report will be Wednesday key event by Bill Downey

Gold Daily Report ~ Oct 22, 2014

Trend
Long Term ~ Bearish-Need a monthly close above 1800 to confirm the bull market final phase underway. Need a monthly close above 1560 to neutralize the trend.
Medium Term ~ Neutral– Gold needs to close above 1294 on a weekly and monthly basis for bullish outlook.
Intermediate Term ~ Neutral/Bullish-Still need close above 1243. Next resistance 1265-1272.
Short Term ~ Bullish- SNext resistance 1256 / 1260 was achieved on Tuesday with a print high of 1256. Odds favor short term peaks this week with pullback into 1st week of November.

Initial Resistance 1247-1257 2nd tier 1265-1272
Initial Support 1231-1241 2nd tier 1222-1231

The last update listed 1247-1257 as resistance and the high was 1256. Support was 1228-1238 and the low was 1245.

Instead of the usual morning smack down, precious metals spiked higher. Gold hit $1255 - its highest in over 5 weeks). Oil also spiked higher and WTI broke above $83.

Gold Overview

Key to this weeks outcome will most likely be the Consumer Price Report due Wednesday morning in USA. It’s here we either peak or decide if we’re heading to 1272. What doesn’t make sense these last two weeks is why is gold stocks still below their moving averages on the chart and just a few points from another yearly low? It certainly be because of their market position where there is no outlook for profits. That we will admit. But it also warns us that the gold move since October 8th (the last short term cycle low and medium term low) is now completing as we arrive just one day before the ideal high day of Oct 23rd on the short term cycles.

The price report will either give gold a final burst higher or we are seeing the highs here. We tried to narrow down the high in our reports for this short term cycle to Oct 23rd – 25th and that is still the odds. If we peaked today just 24 before that projection, its was still a good projection. But I can’t rule out a final push higher into the 25th. A close above 1252-1253 would continue to favor higher gold into that date.

It’s a shame the official buy signal on the signal website page was missed at 1231.30 by 30 cents as the cycles have played out as expected from the October 8th medium term low bottom and the first target of 1256 was reached today (spot missed by 50 cents). That was our sell target for this short term trade. I also missed the 1213 area when gold closed just 30 cents lower as on that day and I did not get a full short term buy signal.

Those traders who played the MINI gold contract were actually filled on that 1231 day whereas all other contracts missed. There were a few GoldTrend Subscribers that got filled at that price because they played the mini contract. Since moving to Canada, I’ve recently found out I can no longer play the MINI gold and have had to change out of USA markets.

Let’s go to the cycles first and foremost as the daily chart is providing good support and resistance lines and the cycles are still playing out as expected.

CYCLES
The medium term cycle bottomed on October 8th (15 days past the ideal date but still within the 2.5 week standard deviation).

The rebound into October 23rd (plus or minus 72 hours) is taking place and the short term cycle is due to peak this coming week. October 23rd – 25th has the best odds of producing a short term high but we do want to say that the minimum objective for this move up has been met at 1256.
As you can see on the chart, today’s resistance came right at the red dotted trend line as we are now in the short term cycle window for a turn that lasts until Monday of next week.

We got our close above 1243/45 and reached the 1252-1262 1st weekly resistance and target. If we close above 1252-1255 odds favor we can move into the 1272-1282 area.

A pullback after this week should come into play lasting until the end of the first week of November where the next buy opportunity in gold comes in play.

Hourly Gold Chart
We discussed last night that Gold was supporting 1245 and could give us the final push for this week towards 1256-1272. We reached 1256 today reaching the minimum target. We can still pullback towards 1240 and even at 1230 there is another support line. If we get that Wednesday, it is not out of the question to retry a higher price. With that red line being hit twice this week it is very possible that gold is in its peaking process for this first wave up since the low. If the next pullback plays out on cycles, then 1210 or 1230 will become a target to watch to get on board for a short term trade.

HUI
Intermediate Term Trend ~ Bearish
Intermediate Term Moving Averages 193.38 – 195.55

We discussed last night that odds favored we turn back down at the averages and move lower into the 1st week of November. We also did not eliminate a move above them either for the simple reason gold has kept moving up. But not the gold stocks.

We’ve touched the moving averages as odds favored and while we won’t exclude a potential rally to 205, odds continue to favor we turn back down at the averages into the first week of November and then in November make the move towards 205. Until we take out the averages we have to favor lower. If we do then look for 205 to provide the peak this week and turn down into and around November 7th.

Gold Medium Term
Long Term Trend ~ Bearish since Oct 2013 @ 1361
Long term Moving averages 1508 – 1553
Medium Term Trend ~Neutral – Gold needs a monthly close above 1292 to return to a bullish mode. 1289 - 1295

Gold held the 1180 bear market lows for the third time In the 15 months. Odds are not high for triple bottoms holding and thus we still have to figure there is one final wave down that is not complete. If we had made a new low it would have been possible to label the drop this year as a final wave 5 and our expectation for gold’s final bear market leg would be in place. Because we did not, the best fit is we are still in wave 4. That leaves a lot of options open for where gold is going over the next three months. On a maximum level, it is still possible for gold to move back to the 2014 highs near 1380 and still be in this wave 4. On a minimum level the 1240-1272 area is the first target. Interestingly, both silver and the gold stocks are now likely in their fifth and final wave.

Going to the chart below, gold penetrated the down trending gold line two weeks ago, but by the end of that week was back above it. Odds have favored we’re heading for a test of the GREEN channel lines, and we just about reached minimum levels on Tuesday.

GOLD ETF GLD
Moving Average Trend ~ 117.65 – 117.24 BULLISH
Building up for one position, so it’s not a backing up the truck purchase.
This should be 1 stock position in your portfolio – NO MORE THAN THAT. BGT ¼ of a position at 153 on 3/7/13 and ¼ at 145 on 4/14/13 and ¼ at 131 on 4/16 and ¼ at 125 on 6/20

GLD intermediate trend is bullish but it is not getting any follow thru by silver or gold stocks so far. The key now is to hold pullbacks to the moving averages. Now that resistance at 119.60 has been broken, odds favor that the trend line we are at and 121.50 should be the high this week and then a pullback to the moving averages into the 1st week of November, it should be a buy looking for higher in latter November.

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