The triangle-vertex-based reversal is here. And it’s also just ahead.
Remember what I wrote about gold futures chart on Monday:
“Gold rallied once again, and it even moved close to the ultimate resistance of $3,000. What does it tell us?
It tells us that the next triangle-vertex-based reversal that’s due on Friday (or close to it) is likely to mark the top.
Don’t get me wrong. I’m not saying that gold futures have to continue to rally until that time with new highs achieved each day. What I’m saying is that the decline is very likely to start on this day or close to it. The path to the final top could take the shape of the continuous rally, but it could also take the form of a quick correction starting today, then a consolidation and another move [up] – perhaps to today’s high (or perhaps even to $3,000) and then a clear slide next week (or perhaps even this Friday).
If we were shorting gold, I would not want to wait for the rally to burn itself out and I’d have a more cautious approach. However, we don’t have a short position in gold – we have ones in miners and in FCX. And since miners are already not performing as well as gold, it seems that keeping the short positions intact is still justified from the risk to reward point of view.”
Yesterday, I added that given how close gold price was to its triangle-vertex-based reversal point, it seemed that we might get one more attempt to move higher, which would then be the final top.
That’s exactly what happened. Gold declined, reversed and moved higher once again.
Here’s how it looks like from the 4-hour point of view.
In other words, Tuesday’s reversal might have been the top, but we might need to wait a few days before the decline truly starts.
In today’s Gold Trading Alert, I wrote the following:
“Looking at price moves from this point of view provides a top that’s about 50 hours away – this suggests that it might form on Monday, perhaps close to the start of the session (or maybe even in the pre-market trading).
Please keep in mind that the above chart features gold continuous futures contract, which is trading almost 24 hours per day during business days. This means that we might see a peak in it before the stock market opens in the U.S., which in turn means that miners could open lower on that day, and even though in gold futures the top would be on that day, it might already be after the top in case of the mining stocks.
The copper futures point to something similar – it seems that the declines are about to start.
Yes, copper futures are once again trying to break above the 61.8% Fibonacci retracement level.
But so what?
This is what we saw in the second half of 2024 when copper topped. After the initial top, there was another attempt to move above the 61.8% Fibonacci retracement, and it was invalidated just as the first one. If what we see now is a repeat of what happened then, then yet another daily rhyme of history has bearish implications if that previous pattern was followed by declines. That’s exactly the case right now.
Is FCX moving higher as copper is testing its recent highs?
Barely. The $0.37 move higher that we saw yesterday was very weak, and it didn’t bring FCX close to its recent high.
FCX is once again telling us how great shorting opportunity it currently presents.”
This, plus other points that I made in yesterday’s free analysis as well as today’s and previous premium analyses suggest that the next week might be very interesting, to say the least.
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Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief