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In the mid-week report I stressed my disappointment with how this 1st Gold Daily Cycle did not live up to past expectations. I also stated that I did not believe that Gold could have formed a Daily Cycle low so soon too. Based on Friday’s drop back to the $1,708 level, I believe this statement still holds true. With Day 20 now upon us, Gold is setting up to form a low with yet another re-test of last week’s dip.
But I do not expect much more downside beyond this. As the Daily Cycle enters the 20+ day count it has now retraced more than enough to qualify for a Cycle Low. The Cycle count is in the timing band, the trend-line clearly broken, and the technical indicators into the oversold area.
But I do caution investors on the downside targets. The $1,704 pivot is a significant technical level because it marks the Half Cycle Low. In a rising market, the Half Cycle is rarely taken out by the Daily Cycle Low. But this technical level is being watched by many traders and because it held up last week it’s where a large cluster of the stops are now set. The concern is that this level will be targeted before the next DCL, so I would not be surprised to see a run on those stops before the next DCL is made. Even the CNBC “experts” are out talking about $1,704 being important, talk about “ripe for the picking”.
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