Chart Of The Day: One More Low For Gold Before Bottom?
Gary Savage | Nov 19, 2015 16:14
When gold (or any other asset for that matter) nears an intermediate degree cycle low, without fail we start to hear all kinds of negative predictions. 'Gold is going to collapse;' Gold is going to $800, $600...' I even saw someone predict $200 gold the other day.
Those are the kind of negative emotions needed to form a cycle bottom. When you start to see traders become irrationally negative, that's when you're getting close to the point where you just run out of sellers. Sentiment in gold is again at 17% bulls.That's a level of pessimism only seen a few times in the last 40 years.
I noted yesterday, a lot of blogs and traders recommending shorting gold. Imagine that, shorting gold after it has already dropped 18 out of the last 21 days. A drop so severe it's never occurred in history. Text book emotional behavior.
We may have one more lower low in December after a bounce, I won't completely rule out that gold could be making its yearly cycle low right now. The upside volume in Direxion Daily Gold Miners Bull 3X Shares (N:NUGT) was a new record yesterday and as you can see, these volume spikes often occur right as a major cycle bottom forms.
It's a sign that smart money traders are positioning for a rally, even if it's just a bear market rally.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.