As we open 2016, the monthly chart shows price in
December having made a lower high, higher low, and lower close versus November's
candle. Price closed the month below its monthly pivot (bearish) but above the
MM and MY MAs and above the 2015 yearly pivot (bullish). The MM MA also turned
upward in December, which would seem to indicate that the August low was a
multi-year low and price should be on the upside of a new MY cycle.
Price has started off this first day of 2016 on a
down note, with the futures now showing price trading below its new monthly
pivot, new yearly pivot, and MM MA and trying to find support on the MY MA. Much like the bullish Monday Low/Friday high scenario often discussed on the
daily chart, it is not unusual for a monthly candle in an uptrend to start the
month off with weakness, establishing the candle's low early in the month and
closing near its highs. There is no guarantee that this is what will occur, but
we should not react too negatively to today's action.
The weekly chart shows price last week having made
a higher low and higher high but lower close versus the prior week, seemingly
finding resistance at the MM MA. Price early in this week's candle has opened
below its weekly pivot and is trading sharply lower, testing the MY MA and
approaching the mid-December low. That mid-December low has stood as the
potential multi-month low, but if it is taken out then the picture becomes more
confusing. Was it a MM low, and last week saw us make an early MM high under MM
MA resistance? Or was mid-December merely a MW low and last week a MW high, and
price is still searching for its MM low? I lean toward the latter, as price
never saw a higher MW low to confirm the December low as a MM low.
The daily chart shows price last making what
appears to be a MW high on Wednesday. Frequent readers know that Wednesdays are
rarely the high or low of a week, but when they are they usually mark a MW high
or low. So price is on the downside of the MW cycle with a low not projected
until 1/7. The green trendline drawn from prior MM lows has thus far failed to
provide support, a somewhat worrisome failure, though it could still provide
"soft" support should price rally above it by day's end.
As mentioned above, it is unclear whether the
Mid-December MW low was also a MM low; price certainly is not behaving as if it
was, however, as it easily sliced through all higher-timeframe pivots and MAs
that should have provided support if price was on the upside of the MM cycle. With the status of the MY and MM cycles unclear, and price definitely on the
downside of the MW cycle, there is greater than normal risk for price to
continue declining sharply for most of this week.
The hourly chart shows price making a multi-day
high after Tuesday's NY close and declining relentlessly into today's pre-market
trading. Such forceful moves in either direction make designating 24Hr
highs and lows difficult, as the daily cycle is overwhelmed by the combined
strength of the MD and MW cycles. We are currently either in the timeframe to
see a 24Hr low or grossly overdue to see such a low. We are also in the
timeframe to see a MD low, but with the MW low not due until late in this week
and no higher timeframe support to force an earlier turn, I would expect any
rally to be very short-lived and likely to be capped at resistance near 2040. A
break of the gold Session MA to the upside should indicate that price has found
its 24Hr low.
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