Equity Management Academy CEO Patrick MontesDeOca recently forecast that gold may be poised to make the yearly low sometime between October 15 and November 15.
On September 3, gold closed at $1,325.90, above the 50-day moving average of $1,218, which, MontesDeOca said, confirmed that the long term trend momentum was bullish. He uses the 50-day moving average for long-term analysis. He said, “As long as gold closes and stays above $1,218, the trade momentum is bullish.” If gold closes “below $1,218, it would negate this long-term trend.”
MontesDeOca explained, “This is the mean or average price for the year.”
With the market above $1,269, the yearly VC price momentum indicator is also bullish. He said, “If we do close for the year below $1,269, it would negate the long-term price momentum to a neutral position.” He warned if that is the case, gold could come down to $1,154 – $983 levels, which would be a Major long-Term signal to go long.
MontesDeOca said such an occurrence is a “Very low probability based on what we are looking at with regards to the cycle picture.”
Gold made a high on July 11 of about $1,377.50. Since then it has come down to the 90-day cycle bottom, marking a three-month correction since July 11.
MontesDeOca said, “The price action seems to be validating and confirming that we are looking at is a 90-day cycle bottom for gold.” He also said that based on the yearly cycle, “We had the potential to rally into October 15 to come in as the new yearly high,” which will “prepare the market basically for the final correction that we should see in the remainder of 2016 or a potential yearly bottom all the way into December, as we saw happen last year.” The yearly low last December 3 was $1,045.
“It appears that the market has come down to a precise time and price where instead of a high on October 15 as expected on the yearly cycle, we have made an inversion,” MontesDeOca said. “Instead of making a high, it came down and made a low. This inversion increases the probability that the yearly lows in the gold market probably will be made sooner than December 15….This inversion indicates that instead of October 15 being a high, it has come in as an inverted low, potentially aligning again with the end of the year cycle that confirms a very strong probability that the lows are going to be made between October 15 and November 15 of this year.”
“This is how we can convert the price action into a signal that we can understand,” MontesDeOca said. “An inversion is a strong signal. It has inverted based on manipulation by central banks, which we have seen recently.” He said the price action is embracing the cycle period that indicates that the inversion is a bottom, coinciding with the 90 – and 360-day cycles. Therefore, he forecasts that an inverted bottom between October 15 and November 15 is “very probable.”