Call it the Trump Rally, or any name you like, but the stock market certainly came alive when the election swung in Donald Trump's favor. While all eyes are on equities, other things are going on in other markets that you should be preparing for.
Today, I'm going to take an in-depth look at the gold market that has been out of favor the last several years. Gold (FOREX:XAUUSDO) did enjoy a strong rally in the first half of the year and was a top performer. Since moving close to $1400 in July, gold has steadily eroded down to around the $1,180. The question now is, is gold going to continue on the downside or begin to stabilize and start looking forward to what could be an inflationary future? With that in mind, I decided to look at three market keys that could unlock gold and determine its future.
Long-Term Negative Force Line
FIG 1. I have drawn a long-term down sloping trendline starting from gold's all-time high of around $1900 and connected it to several other high points over the years. To be a valid technical trendline, it must touch three points. When that happens, it confirms the validity of the line. The long-term negative force line seen in FIG 1 is the dominant and number one element that will determine which way gold is headed in the future. I would consider a move over the $1375 - $1400 (3) levels on spot gold as a major signal that gold has changed direction to the upside. When this happens, and it will happen sometime in the future, gold will enter into a multiyear bull market. FIG 1 is the number one technical aspect for gold and should be watched closely in 2017.
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