According to Mike Paulenoff, a Wall-Street veteran, the gold market will see some strong upside action within the next few months. He believes that this new bull phase will revisit the September 2011 high of $1,921.05 so long as prices break resistance at $1,640.30.
By Mike Paulenoff
Aug. 21, 2012, 3:39 p.m. EDT
My cycle work in gold indicates we're due for a few months of strong upside action.
Using cycles based on 5.5 months, gold was due for a low between June 11 and 15 after its December 29 low at $1522.48.
The two lowest-lows in and around the anticipated cycle low window occurred on May 16 at $1526.98, followed by a successful retest on June 28 at $1547.87. Every bout of subsequent weakness has held above the May-June lows, suggesting that, indeed, a 5.5 month cycle low has been established, presumably ahead of two months of bullish price action.
Today, spot gold has broken above key, 10-week resistance at $1625, and has continued higher quickly towards more important resistance at $1640.30, the June 6 high, the first signal that a new up-leg is in progress. The next immediate challenge is a test of the September 2011 to August 2012 down trendline, now at $1672, a break of which should trigger upside continuation to $1680-$1700, thereafter.
At this juncture, only a failure to hurdle $1640.30, followed by a decline that breaks back beneath $1625, will indicate that spot gold has disappointed and trapped the bulls, yet again this summer.
Barring such a bull trap, my intermediate-term pattern and cycle work will be arguing strongly that spot gold has entered a new bull phase that should revisit the September 2011 high at $1921.05.
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