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Gold Follows GCI Below Bull Market SupportErik McCurdy Earlier this week, we noted that gold had moved below support at the lower boundary of the cyclical bull market from 2008. On Friday, gold closed near weekly lows, confirming the break below cyclical uptrend support and moving slightly below congestion support in the 1,600 area. The cyclical breakdown is a meaningful bearish signal that favors a continuation of the correction that began in September 2011. (Click on images to enlarge)
The cyclical breakdown that occurred this week was predicted by the negative divergence that developed in early April when our Gold Currency Index (GCI) closed below support at the lower boundary of its cyclical uptrend.
The corresponding uptrend in the US dollar index that began in late August 2011 has been consolidating since January and the rebound off of uptrend support during the last two weeks has caused the consolidation formation to develop a bullish character, indicating that the rally is attempting to resume.
As we often note, charts do not always have an interesting story to tell, but when they do, it is important to listen to their message. The intermediate-term trends in gold and the US dollar that began last year are attempting to resume, so it will be important to monitor market behavior closely in May. We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers. Try our service for free. ### May 12, 2012 Erik McCurdy is the senior market technician for Prometheus Market Insight and has been analyzing charts every day for over 15 years. The software program that he developed to monitor long-term stock market trends has correctly predicted over 90% of the turning points in the S&P 500 index since 1940. His Gold Currency Index has predicted every major trend change in the US gold market since its creation in 2005. 321gold Ltd |
