Gold Forecast: Gold Cycles Predicted the Recent Rally

Recapping Last week

Last week's trading saw Gold forming its high in Tuesday's session, here doing so with the spike up to the 1875.30 figure. From there, a downside consolidation was seen into Thursday's session, with the metal dropping down to a low of 1842.50 - before bouncing off the same into the weekly close. Note: we now move to the August, 2022 contract for our new numbers.

Gold Market, Short-Term

For the short-term picture for Gold, the last low of significance came from the 10 and 20-day cycles, which called the most recent rally phase. Shown again on the chart below is the smaller 10-day component:

From last weekend: "the action into last Tuesday actually favored these (10 and 20-day) waves to have bottomed, an assessment which called for a minimum rally back to the 10-day moving average for Gold - and which was easily met with into Thursday' session. Having said that, with the 20-day cycle expected to bottom with the 10-day wave, the more ideal path would call for additional strength - on up to the higher 20-day moving average in the near-term."

As mentioned last weekend, due to the fact that the larger 20-day wave was expected to bottom with the 10-day component, the probabilities favored additional strength, on up to the higher 20-day moving average for Gold - which was easily met with the action seen into early last week. 

With the above said and noted, yet another short-term correction phase currently looks to be in force off the 1875.30 swing top from last week, with that correction coming as a result of the smaller 10-day cycle. In terms of price, the normal magnet to the downward phase of this wave is the 10-day moving average or lower, which came within earshot of being hit with the drop into Thursday's low. 

In terms of time, the 10-day cycle is 9 trading days along - and with that is already into normal bottoming range. In terms of patterns, the probabilities favor the move down off the 1875.30 swing top to end up  as a countertrend affair - due to the position of the larger 72-day cycle. 

Gold's 3-8 Week Picture

Stepping back slightly, the overall action also suggests the mid-May bottom to end up as our trough for the larger 72-day cycle, which is shown again on the chart below:

As mentioned in my prior articles earlier this year, the last correction of significance was expected to come from this 72-day cycle - one which would see the 72-day moving average acting as the minimum expected magnet. From the early-March peak, a sharp decline was seen, easily meeting this assumption into late-April. 

Going further with the above, the last key trough was expected to come from this same 72-day cycle. In terms of patterns, the analysis called for the recent decline phase with this wave to end up as a countertrend affair - against the December, 2021 trough of 1766.40. 

The above pattern analysis was due to the fact that - when this 72-day wave is able to take out its peak made on the last upward phase - the probabilities are 80% that the next downward phase of the cycle will hold above its prior trough. 

With the above said and noted, the March, 2022 peak was higher than the prior top for this 72-day wave, which was registered back in mid-November, 2021. Thus, our assumption was that the most recent decline phase of the 72-day cycle would end up as countertrend, against the December 2021 low. 

Stepping back then, if the upward phase of our 72-day cycle is now back in force, then we should expect the downward phase of the smaller 10-day wave to end up as a countertrend affair - holding above the most recent low from May 16th. If correct, then our ideal path is looking for continued strength in the days/weeks ahead, once again coming from the upward phase of the bigger 72-day cycle. 

In terms of price with the above, of particular note is that the average rallies with this 72-day cycle - when forming the pattern of a 'higher-low' - have been around 14% off the bottom, lasting an average of 39 trading days before topping. This gives us some insight on how the action could play out into the Summer of this year. 

The upward phase of this same 72-day cycle should eventually form the next key peak for Gold, expected to play out into this Summer. From whatever high that forms with this component, Gold is expected to see another larger percentage correction into later this year, before forming a more key bottom. From there, a very sharp rally is favored to unfold into next year; more on this as we continue to move forward. 

Jim Curry
The Gold Wave Trader
http://goldwavetrader.com/
http://cyclewave.homestead.com/

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