Several weeks ago [see: May 17 update] I noted that, although gold had broken down through its SMA200 and fallen out of a prominent rising channel, I wasn’t buying the downside scenario this suggested.
I’m not crazy about this scenario, even though the backtest says it makes sense. I think DX is heading lower than 97.583, and this would suggest higher GC prices.
That would require that GC reenter the rising red channel, of course. But, stranger things have happened — especially when the underlying is so heavily manipulated in the first place.
As it turned out, gold did exactly that – blowing through the backtest and reentering the rising red channel. Yesterday, it pushed through an important fan line and briefly topped its Apr 17 highs.
With DX well on its way toward our downside target, does gold have still more upside left?
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