As expected, the blow-out CPI number triggered massive volatility. Such a terrible print might have put sustained pressure on asset prices in anticipation that the Fed will be forced to act more aggressively than it had signaled. Despite that, stocks put in a wild intraday reversal after a vicious pre-market sell-off. Although metals paired their own pre-market losses, they did not recoup to the same extent.
That said, a zoom out to the weekly chart of gold shows the low of the week of September 27 well intact with weekly stochastic failing to stay in the oversold position.
In fact, weekly stochastic RSI looks like it wants to turn back up. Price is also sitting at the bottom range of the Bollinger bands having tested and held the low end once already. The 50 week moving average is stretched above, which may be looked at as a long target for opportunistic swing traders in the near future. And, although gold sold back down, gold miners are holding the breakout we’ve been showing. More; they seem to have successfully back-tested the breakout line. Some traders may consider this to be an ideal point of entry, with a target up into the yellow resistance zone.
Does this mean gold is ready to shoot back up to all-time highs starting today? Not in this trader’s opinion. However, there could be an opportunity for a swing trade to the upside, while gold continues to carve out a bottom in anticipation of the FED’s failure to either:
- get official inflation down to 2% or
- get official inflation down to 2% without causing an absolute economic meltdown.
Thanks and have a great weekend,
