Today King World News is pleased to present an extremely important update on the war in the gold market from Michael Oliver at MSA. Oliver allowed KWN exclusively to share this key report with our global audience.
By Michael Oliver, MSA (Momentum Structural Analysis)
October 31 (King World News) – MSA has recently shown many long-term momentum charts of gold, all of which demonstrate that the sharp pullback in no way broke the structural integrity of the long-term momentum uptrend that emerged with multiple momentum breakouts (quarterly and annual) in February. Period. The same applies to GDX…
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Our main focus now is in identifying points of upturn. We begin with a long-term momentum chart of GDX (see chart below).
This 40-wk. avg. oscillator is effectively the same as the 200-day avg. or 3-qtr. avg. oscillator.
Firstly, we aren’t 100% sure the decline is over, but where it landed suggests it might be. A further drop won’t alter our positive view of GDX, as the zone of potential support extends lower than we’ve seen to date.
It’s unlikely this long-term chart will be the best place to look for a credible sign of upturn. Instead, this chart has already pretty much accomplished its task in defining both the upturn (first up-arrow) and a target zone for a low (second up-arrow).
There is rarely a market situation in which only one technical factor will provide entry or exit signal. It usually takes looking at several, in an ongoing basis, to identify turns.
Here we use a 15-day avg. (effectively a smoothed 3-wk. avg.) to measure (see chart below).
Note that the process of decline since July produced three down waves in momentum, with the third wave not confirming the new price lows.
The Key To The Gold, Silver, And Mining Share Liftoff
If momentum can close a day out above the recent high close and the downtrend connecting those three peak closes then assume weekly momentum is turning. This does not mean cannot have selloffs, but it probably means you have seen the low. Basically any day that can close somewhat over $25 accomplishes the task.
King World News note: What Michael is trying to identify is a signal that the mining stocks are reversing back into an uptrend, thus marking the end of the correction. He highlights the level of 25 on the GDX as the key to see a clear sign of a reversal. If GDX closes above 25 on a daily basis that will be a good indicator. If it closes above that level on a weekly basis that would be even better. A reversal in the mining shares will also be accompanied by a reversal in gold and silver to the upside, so keep an eye on that key level that Michael highlighted because the mining shares will continue to lead the way in this bullish leg of the secular bull market in gold, silver, and the shares.
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