Nothing goes straight up forever or down forever in the stock market. Generally, a stock moves within a range until a more definitive aspect of the firm reveals its future outlook. This application includes bonds and commodities. There are other ways to find the future projection. One nice aspect is charting. For those of us who use charts to follow price action, the use of the mathematical genius of the Fibonacci ratio is a must. I use this formula to project price patterns in conjunction with volume to price levels.
What Fibonacci Says Now...
It is no secret that gold fell from the $1500 level. It failed to maintain the rally that saw it zoom past $1500 price level on its way to $1566. The math genius of Fibonacci called it. The present, slow decline appears to be a complete Fibonacci retracement. If this is true, gold should return to its breakout area of $1448. As of Friday the 8th of November, it was $1452.
One would think that this means it is getting time to buy? Not so fast, Kimo-Sabe. There are some other important indicators in charting. One of them is patterns.
Patterns...
come in two forms. The first is a picture formed by drawing a line that follows price. It is like connecting dots. A shape can appear. Some prominent patterns are flags, pennants, cup and handle and so on. The other form could be called a cycle. The entity's price turns up for a period of time or it could turn down for a period of time. I noticed that gold is running in a 45 to 60-day cycle in 2019. This is not to say that this characteristic will carryover into 2020, but it is worth keeping track of. It has been very accurate in 2019. Take a look...
We begin by going back to December 2018. Gold sat at $1196. It began to rally to which also began this cycle / price movement. Flash forward in the 45 to 60-day period. You are in late February. Gold has rallied to $1349. If you like math, do the Fibonacci ratio. It works!
Then, gold began the downturn. For the next 45 to 60-day period, it declined to $1267. We are now in May 2019.
Gold, then moved into its up cycle. For the next 45 to 60-days it rallied. As we enter late June, gold hits $1400. Yay! I did well with Wheaton Precious Metal (WPM).
As per this recent history, gold fell back in the next 45 to 60-day period. After July and August notched their days on the calendar, we saw the cycle continue.
Gold rallied hard to $1566 as of the 1st of September. It has fallen from grace since that date. We are currently in the downturn 45 to 60-day cycle. As stated above, Fibonacci indicates that $1448 will be the resistance point. This price was the last breakout point. If the cycle is maintained, gold should rally sometime after Thanksgiving. (Praise God) This uptrend should carryover into the New Year. Pay attention to contract volume. It will provide clues as to the strength of the cycle and gold itself.
Longer term...
There is a strong relationship between the dollar and gold. When the dollar is strong, gold declines. When the dollar weakens, gold rises. King dollar is central to all commodities. Keep watch!
