The trading setup for gold is very interesting here.

At this point, there are a lot of “ifs” for this trade working out.

The COT data for gold is only slightly bullish. Yet intermarket analysis looks promising:  If yields are topping here (bond prices bottoming), and the US dollar rolls over from a toppy looking patten, Gold prices could reverse hard to the upside in the not to distant future.

Here’s a chart of the Gold (NYSEARCA:GLD), the US Dollar (NYSEARCA:UUP), and 20+ year treasury bond (NASDAQ:TLT).

 

 

More if’s: If the rally from December 2015 to July 2016 was the first wave higher (Wave 1) in a new bull market, and the recent pullback from July 2016 until December 2016 was Wave 2 (counter), its possible that the rally from December 2016 to February 2017 was minor wave 1 and that the current pullback is minor wave 2. This sets up the possibility that Major wave 3 of 3 could start at any time.

From an Elliott Wave perspective, this is where you see the meat of a bull market for most financial assets.

 

At this point, this is a risky trade, but if I’m correct, there will be plenty of opportunities to enter this market when we get more confirmation.  Note that I recently took a small trading position in GDXJ.

Thanks for reading.  Reach out to me at arbetermark@gmail.com for inquiries about my newsletter “On The Mark”, if interested.

 

Twitter:  @MarkArbeter

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Not Investment Advice – Please read investment disclaimer.