Detailed Analysis of Individual Charts of Current Interest:
As of Friday February 19th, gold is positioned in a rare setup that normally only comes along once or twice every 15-20 months. Silver, crude oil, and the CRB Commodity Index are all in equally rare and compelling setups (the setups are based on a set of rules that depend on weekly closes and the weekly stochastic indicator, and the rules are customized for each item to increase the frequency of good signals as they all have slightly different personalities).
Though there is no guarantee that any one trade will be successful, the odds now greatly favor a strong move up for gold, silver, crude oil, and most commodities. There is even a fair chance that gold and oil will run higher right from the open next week and, based on that possibility, we bought additional gold and crude oil futures (at $1118.80 and $80.24) immediately before the close on Friday with tight stop loss orders less than 1/3 percent away.
We may give away that 1/3 percent, but such a small amount is more than worth paying to be in at an open that has a decent chance of just running without dipping much below the Friday close (if it dips at all) for the rest of the week. Our current expectation is for a major move that – at the very least – runs until April before another high of more than short term significance is reached.
The big picture is that gold broke out of a 19 month long base when it had a weekly close at $1048. Gold is thus expected to have major support between the two red lines at $1033.90 and $978. A weekly close below $970, while not expected, would indicate a failed breakout.
We previously stated that gold may be entering a steeper rate of ascent in line with a suggested new channel marked by the two dark blue lines, and that the orange channel might eventually be left behind. That could soon happen, and gold likely already hit bottom when it came within one percent of the top end of the $1034 – $978 support range.