2016: The Year Gold Dip Buyers Ruled
Monday July 18, 2016 09:44
(Kitco News) - The gold market has slipped off its recent highs and is consolidating quietly. Don't worry –the bulls are just biding their time. Pausing to regain fresh momentum. Recharging their batteries. Filling up the gas tank. Pick your metaphor –it's just a repeat of what's been happening all year long.
Will the year 2016 will go down as the year of the gold dip buyer? Maybe yes. They've been active and supporting gold all year long. See Figure 1 below to pick out the many points where gold dip buyers have entered the market to support the yellow metal and pick up "bargains" that keep getting more expensive.
Trading lesson: Pick out your lower price points now. Where do you want to accumulate gold on the next dip?
The rising trend pattern since the start of 2016 means each gold price retreat stalls at a higher level. Longer-term investors see a closing window before $1,400 will be the new floor for gold.
Daily momentum indicators show the recent rally wave has waned. In fact, trend following traders like the legendary "Turtle" trades would have already exited long positions according to one system. (Read more on that below).
Market recap: In late June, gold busted higher from a multi-month sideways range. The measured move target of that range lies just above the $1,400 per ounce level in gold. Short-term momentum has stalled, but the upside target remains intact. Gold has not slid back within the old range. For now, short-term support lies at the 20-day moving average and then at $1,308 – the "breakout" point for the late June-early July rally wave.
Bottom line: The gold trend is bullish and intact. Remember, it's summer. Vacations call. Wall Street and London trading desks are half-staffed as traders head for some R&R. Smart traders use consolidations to identify buying points. When and if gold retreats to your desired level, strike quickly. Your buy spot may be a short-lived opportunity. After all, that's what has been happening all year long.
By Kira Brecht, contributing to Kitco News;