We’re going to face a thrilling week

In the US deficit debate, a solution by August 2 seems to be opening up. The reaction of the stock markets and both precious metals to the imminent decision is pointing to – at least short-term - rising stock indexes and to long-term rising precious metal prices:

Monthly buy signal in gold:

Monthly buy signals are seldom, so we’ll have to grab what we can when they’re being generated. In the actual monthly 8 Candle GUNNER24 Up gold closed above the actual monthly resistance (3rd double arc). In the issue of July 17 we prepared you for the probability that gold would close above the 3rd double arc. According to the GUNNER24 Trading System, a July closing price of clearly above 1615 triggered a buy signal activating the new target of 1845 through the end of the year or until the spring, respectively. Now gold is supposed to go orderly up to the main target, limited upwards by the resistance trend line and supported by the Gann Angle. The SL for our long-engagement is at 1452.

Gold has produced an unambiguous sign, whereas silver is still bristling a little bit.

It closed exactly below the last important resistance (the upper line of the 4th double arc). A plus of 20 cents more would have activated the new up target of 46.50 $ officially. All the same, logically speaking silver will have to follow its big shiny brother…

The Gann Angle anchored in the chart above is of utmost significance. It seems to have been re-conquered with the July close. Since the new month will open precisely above that Gann Angle a contact with it might release another very dynamic rebound upwards as early as on Monday. At the same time, opening at 39.90 would mean that the resistance of the upper line of the 4th double arc will be skipped over in terms of time. The result of those mere observations is really that silver will follow gold as early as next week being able to crack all the further resistances (40.30 – the upper line of the just passed square and the 41.20) on weekly basis. A closing price above 42 next week would activate the 46.50 as well!

Actually the stock markets should also react positively to the deficit decision even though at least the S&P 500 maneuvered itself into a precarious situation being closely in front of a long term short signal:

We see that last week touched exactly the long-term Gann Angle support again. Thus the market is testing this support for the fourth time. According to Gann the third and the fourth tests of a Gann Angle are crucial! Really the Gann Angles may be broken not before the third or fourth test. (or upwards as well, of course). This fourth test is very decisive now… if the Gann Angle breaks now, at the fourth test the market will swing into a long-term downtrend. In that case we would see at least 7 more weeks of correction. That would be a total of 21 weeks, beginning the count at the year high. The target would be lying at 1251, and the main target at 1224.

But if the Gann Angle resists now in the fourth test it should actually generate a stronger rebound energy than it did in the third test. That is supposed to end in a new year high, logically speaking.

So, necessarily we’ll have to await the course of the coming weeks to make our investment decisions.

The weekly 5 Candle GUNNER24 Up Setup of the NASDAQ-100 demonstrates that generally speaking a positive reaction of the markets is due:

After the definitive break of the 4th double arc had produced a clear buy signal the week before last thus activating the main target at 2527 last week was naturally showing a negative price course. However no so called reversal candle was produced and least of all the 4th double arc was broken downwards. Still the 4th double arc is executing a good support function which is hardly supposed to be left downwards. The price course looks rather like a test of the 4th double arc that turned out pretty low, admittedly. Only in case of a final break of the support Gann Angle this assessment is to be denied.

Be prepared!

Eduard Altmann