Gold Divergences Are Everywhere

One of the ways that traders try to spot major turning points in the market is by using divergences in a MACD or stochastic indicator. Often, when an equity is making a new low on the chart and the oscillator is not confirming the move and making a higher low it is signaling that a major low in the equity could be taking place. At this time, gold futures are signaling a potential positive divergence on the weekly chart. If this divergence plays out it could lead to a major move higher for gold in the future.

Gold futures are currently trading around the 1218 level. There is a major triple bottom support area for gold around the 1180 level. These lows for gold were tested in June and December of 2013. Should this triple bottom support level be successfully tested for gold it could lead to a massive monthly chart reversal level signal. After all, the sentiment in gold is as bearish as ever. As a contrarian investor, you should always look the other direction when everyone is leaning the same way.

At this point in time, gold continues to remain under pressure. The sell off that began in September 2011 has now lasted three years long. It should be noted that the bull market in gold lasted around twelve years in length, it began in 1999 and lasted until 2011. This current correction in the precious metal is now one quarter the amount of time of the last bull market in gold. This tells us that around the three year mark is when gold should begin to find a solid bottom for a rebound. Unfortunately, this does not happen to the exact day, it is just a general proximity for a low in gold. So traders should now start to look for major bottoming signals to present themselves in gold.





Nick Santiago
Chief Market Strategist
www.InTheMoneyStocks.com