Prospects for the near future
Among the small gold cycles, the 34-day wave shown in the chart to the right is the most significant.
As expected earlier, the last phase of the short-term correction in late June should have bottomed out in a 34-day cycle with a potential low at $ 1,750.10.
The price action at the beginning of last week confirmed a bottom formation, and this wave will now move up for the next weeks or two before forming its next peak.
Since more than 85% of the time the price of gold returns to the 34-day moving average, in the coming days it is likely to reach the indicator, after which it will head towards the maximum of this component.
The moving average is currently in the $ 1.837 area, but is declining daily.
The 34-day EMA is moving near the upper boundary of the extrapolated (and downtrend) channel of the 72-day cycle, which also makes it a key resistance level for gold.
That being said, if the rally off the end-June low becomes a counter-trend, it is likely to stop at the 34-day moving average and / or the upper border of the long-term channel.
There is a possibility that the 72-day wave also bottomed at $ 1,750.10 at the end of June.
Some technical indicators may contradict this, but the final word rests with price action.
If gold is able to break the upper border of the 72-day channel (especially on the close), this move will best confirm that the next uptrend of this wave is back in place.
Advances within this cycle will add additional strength in mid to late August before gold picks up a more significant peak.
Gold is expected to peak in the next larger 154-day wave.
This component is expected to reach a minimum of plus or minus in November.
After both waves hit the bottom, gold will rise sharply in February 2022.
US stocks form mid-term peak
Looking at the US stock market as measured by the S&P 500 or SPX, it is still in the process of forming a mid-term top. This top is expected to be the result of a combination of 180-day and 360-day cycles.
The last short-term correction brought the SPX to a low at 4.164.40. The next major decline is projected to take place in the not too distant future.
The 200-day moving average is likely to be a magnet for the upcoming fall, which is expected to be the biggest percentage correction this year.
Even with that said, none of the key reversal levels have been broken in recent months.
There is a possibility that the next phase of the mid-term downturn in the US stock market will end in a counter-trend with a bottom forming between August and October of this year.
If the forecast is correct, this will be followed by another rally of 20-40% or more, which will last until next year – before the next higher peak forms.