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Gold, Past the Point Of No Return

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“The metals complex is painting a bullish picture of a potential large rally phase.”

The above is from the January 3, Hit & Run Report, Gold Updatewhere we gave our analysis for a breakout in gold and silver.

On Wednesday, the promise of that setup came to fruition.

GLD triggered an Opening Range Breakout that developed into a strong trend day that attacked an open gap at the 172 region from November 22.

As well, GDXJ broke out above the Neck Line of an inverse Head & Shoulders at the key 42 level.

42 has rejected GDXJ 3 times since December 7.

So the break over 42 triggered a Rule of 4 Breakout in tandem with the aforesaid inverse Head & Shoulders.

GDXJ was set up for the move.

Why?

It was in the Plus One/Minus Two buy position with Tuesday’s pullback.

Impressively, GDXJ knifed through its 50 day line on a big expansion in volume.

In so doing, it blew through the January 5 large range reversal. So what we have staring us in the face is a Reversal of a Reversal, or what I call a Keyser Soze.

Bullishly, there was no specific news to point to for Wednesday’s rip.

Nor was there any Fedspeak that caused the explosion.

Consequently, there were no sellers who may have been front-running a Powell pirouette.

As traders, we’re in the “when, not why” business anyway; and when something moves of its own accord with no particular catalyst to point to, it’s usually a sign of a genuine directional move.

Miners that came out were AEMWPMAG and FNV, to mention a few.

The metals should surge higher with focus on the time and price levels indicated in yesterday’s private Hit & Run Twitter feed.

The fact that gold and silver’s move unfolded in the wake of tumbling equity markets reinforces its upside potential.

With literally nothing working in the market, when something shines, it becomes all the more interesting — like focusing a magnifying glass on dry sentiment.

It seems the move was greeted with a skeptical yawn because well, to be honest, we’ve all seen this movie several times since last May’s attempted breakout.

With the risk of being condemned to trader hell, let me venture that “this time looks different.”

Underpinning the idea of continuation in the metals is that there was little note of it on Twitter or the financial media.

GLD’s recent upswing that started on December 15 from a 163.80 low has been bullishly defined by no more than 2 consecutive lower daily lows. In fact, that occurred only once on December 21. Every other pullback since the Dec 15 low has been a one day affair.

The die for Wednesday’s GLD surge was cast on January 11 with Phil D Gap.

Yesterday, GLD capitalized on blue sky when it cleared the large range reversal from January 5.

The move took GLD to the cusp of another open gap at 172.23 from Nov 22.

GLD closed at 172.08.

GLD is attacking a trend line from its August 2020 ATH.

That trend line comes in right at Wednesday’s 172.18 close.

Just above is a declining trend line from its May 2021 high that comes in at 173.18.

Breakage above both trend lines should ignite an upside cascade.

As well, November installed a large range monthly reversal bar from a high of 174.67.

Taken together, what we see is momentum above this 173/174 region puts us past the point of no return.

In sum, the indication is GLD is on an initial trajectory to 183, which is 180 degrees up from the March 2021 correction low.

Above 183 opens the door to 197 and a fresh ATH.

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