Perhaps you know that I consider the further course of the gold price as to perform very positively. Through the year 2018 gold should be a safe haven, and until then, in case of extreme corrections you should put some more on. More than five weeks ago gold started its last, really impressive rally. Since then, the 8 cylinders have been running at full speed. Full out! Traditionally, the month of September uses to be the best performer in gold. The traditionally best performing period began in August. Silver achieved a nasty breakout of its trading range. September target is 20.60$.
All the same... GUNNER24 is announcing the first background noise which might thoroughly be the first indication of a capital engine trouble.
Let me explain the menacing situation:
As analyzed in the last issue, on Tuesday the gold future decided to escape upwards out of the 1240 consolidation area. Thus, upwards it joined the Gann Angle that is anchored in the middle of the setup. As announced, we covered our longs very close to the week high. Instead of doing so at the calculated 1258 as mentioned, we did it with the first touch of the lower line of the 2nd double arc at 1256. Since then the price has been staying below the target. On Friday it broke the Gann Angle. The speed limiter began to work. At first glance nothing unusual for the gold future is at a buy target after all. But taking into consideration the silver breakout it's definitely an unusual situation. I'd really expected that the future would close within the 2nd double arc on Friday to activate the next buy target, the 3rd double arc, at 1298. This is effective next week: A closing price within or above the 2nd double arc will confirm the 1298!
Including the Gann Angle break in our trading plan the Friday low (1239.2) should be fallen short but closely on Monday/Tueaday, and gold should touch down at the primary Gann Angle and rebound again. That would be the second/third test of the primary Gann Angle. With the second or third test respectively we may always expect a rebound.
Please, consider the Friday low at 1239.2. In the further course of this issue, below in the monthly analysis you'll recognize its importance.
A break of the primary Gann Angle in the course of next week should have the gold fall down to the 1*1 Gann Angle. For a while, target then would be 1215-1220. MACD, RSI, Slow Stochastic in the daily time frame are overbought, and they are turning downwards already.
Conclusion: In the daily 8 Candle GUNNER24 Up there's no indication that gold would imitate the silver breakout. But if on Monday or Tuesday the primary Gann Angle resists diving into the 2nd double arc there will be chances to break upwards touching at the 1298 relatively soon.
Weekly Setups:
In the actual 8 Candle GUNNER24 Up Setup gold has reached the main target of the initial impulse. So the engine is working but with 7 cylinders since in the main target we always have to speculate on a change in trend or an enduring correction, respectively. It's exactly the important time line where the gold future touched the lower line of the 5th double arc rebounding from it very moderately. So we don't see a spike candle. At first, that's a positive sign. But counting the candles it's negative that the 5th week of the upswing was reached. That's why we shall be prepared for a turn. And it's very negative that the probably last high of the last up swing is lying exactly on an important time line.
Let's refine now the upper GUNNER24 Setup by the elliptical vector:
As forecast in the last issue the red dotted resistance diagonal was reached. Actually, GUNNER24 had predicted 1258. But the 1256.6 are lying exactly on the diagonal all the same, we just have to take into consideration that all the time lines and diagonals in the setup form a line that has a "thickness of 2-3$".
The diagonal "may" have ended the upswing, but the fact is missing that the main target hasn't been touched at in this setup! So a week high we may mark next week could be at 1263. At the main target. Those 1263 are corresponding with the upper line of the second double arc in the daily 8 Candle GUNNER24 Up Setup!
But a new week high would be the 6th consecutive week of rising prices that would make an eight week upswing to become very likely.
The nuclear chart: The actual monthly 13 Candle GUNNER24 Up Setup
In the big picture we recognize that gold is just in front of the main target, the 3rd double arc. The high of the 55th month is overstepped already. So we can expect a important high or low near the 89th month. If in terms of their angle of gradient and their price extension leg B performs just like leg A the price target will be at 1298.7. It should be reached in May, 2011. All the actual supports and resistances are anchored in the setup with a red X. Further we recognize that the 2*1 Gann Angle is limiting the gold price rise in terms of price and time. It should never be broken upwards permanently. The candle green 20 (almost 21) is marking the all time high. So it might mark a very important point of change. A new all time high would mean that we would not reach a new important high before the green candle 33-34.
"By chance" the 1298.7 are corresponding to a very important price and time magnet in the setup which falls on September. Let's zoom into it:
We recognize that July and August tested intensely the green dotted support diagonal. Accordingly, the monthly support for September is lying near 1180. That's where in case of a possible September correction long term engagements can be entered into. Even though this September is just three trading days old it makes clear the pointed situation. Above, gold is stopped by the resistance line at 1256.6, and below it is backed by the support horizontal at 1239.2. Breakout mode! So the next days determine the further run.
Here's what we may/must adjust to:
1. We breakthrough. Chance for next week 20%. After all we'll have to bear in mind that the price and time magnet is just 50$ away from the actual price. A matter of maybe two or three days...
2. The September low does not persist next week, in that case we'll break the support horizontal downwards. Down targets then will be A) the 1215-1220 or possibly in the further course the 1180. I estimate that scenario at a 60% of probability because it is supported by the daily and weekly setups.
3. We fake an escape upwards. Target in that case would be the 1263 or a maybe a little higher, and then we turn downwards. That scenario is backed by the actual GUNNER24 Up Setups in the 8 hour time frame as well in silver as in gold. Chance a 20% here, too.
To the stock market:
Briefly and concisely: We covered one half of our longs at 1078, the other one at 1105. We're flat now. The S&P 500 broke the first double arc upwards (buy signal), but now it has arrived at the weekly resistance. Anyway in the future the gap should be closed at 1122. The 1*1 Gann Angle is limiting the rise!
Next week opens exactly at the 1*1 Gann Angle, the primary Gann Angle in the actual 2 candle weekly down. In the second test we are expecting a considerable resistance there. But since for many, many reasons the long term upwards trend has been resumed, see GUNNER24 Forecasts, Issue 08/29/2010 we'll try to use a probable retracement for a re-entry at 1078-1180.
The actual weekly 8 Candle GUNNER24 Up is indicating the gap close at 1122, as well.
Be prepared!
Eduard Altmann