The monthly chart shows an increasingly bearish
picture unfolding as we have made a lower high and lower low thus far in January
versus December and are currently trading below the MM and MY MAs as well as the
monthly and yearly pivots.
This behavior is indicative of price being on the
downside of the multi-year cycle. Of course, where price closes in a given
candlestick is far more important than the journey it took to get there, so it
is possible that price could close January trading above all the MAs and
pivots. This would support the idea that the August low was a multi-year low and
that price is currently on the upside of the MY cycle. Should price instead
take out the August low, we would be left with a choice of two bearish
scenarios; it is possible that the August low was not a MY low, and price is
still searching for that overdue low, or August was a MY low but we saw a very
early lower MY high in November and price is now on the downside of a brand new
MY cycle. This latter scenario is the most bearish of all, as price would spend
most of 2016 searching for the next MY low. Unless price makes a higher low or
double-bottoms with the August low, the bullish case for the market is lost. Of
the two bearish scenarios that would remain, the evidence would side on the
latter, most bearish one.
The weekly chart shows price last week making a
lower high and lower low versus the prior week, closing below all relevant MAs
and pivots. This is behavior indicative of price being on the downside of the
multi-month cycle. There is some question as to whether we are overdue to see
a multi-month low, or if we saw a MM low five weeks ago followed by a lower MM
high two weeks later. Again, the latter case would be the most bearish
scenario, as it would mean the next MM low would not be expected until late
February.
Early in this week's candle price has traded above
its weekly pivot and is attempting to trade up to the MW MA. As mentioned
above, where price closes in its candle is more important than the journey it
took to get there, so while a bullish open is nice to see, it has no real
bearing on where price will be by the week's close. If last week was a MM low,
price should rally throughout the week in search of its MM high which is
projected for next week. If we are still on the downside of the MM cycle, price
should make its high for the week today or tomorrow and then trade lower towards
the end of the week.
The daily chart shows price the past two weeks
finding resistance at the blue MD MA, behavior indicative of being on the
downside of the multi-week cycle. We are overdue to see a MW low, and the MW
high is projected for this Friday. Price is currently trading at the MD MA, and
if it is finally able to break through that resistance it will indicate that the
MW low has been seen. I would then expect price to test the green MW MA by
week's end. Should price instead find resistance here at the MD MA, it would
become more likely that we will see an inversion, with the MW low coming on the
day of the projected MW high.
The hourly chart shows price yesterday making a
24Hr high under weekly pivot resistance and making a higher 24Hr low several hours
later just below the 24Hr MA. This confirmed Friday's low as a multi-day low. Price has since traded higher but appears to have made a 24Hr high three hours
ago, as price is now trading below the Session MA and that MA has begun to turn
lower. A 24Hr low is projected for late afternoon, but if Friday was also a MW
low then I would expect price to find support for the 24Hr low at the weekly
pivot/24Hr MA confluence area near 1890. If this occurs price would then be
free to test the MW MA on the upside of the daily, MD , and MW
cycles.
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