In last week’s Gold update I said:
Because we are looking for the confirmation of such a very long cycle peak, I am going to watch with interest over the next two or three days and see how price interacts with that 80-day FLD.
And I explained that the Gold price could either cross neatly (at a roughly 90 degree angle) or it could “ride up” the FLD.
What did it do? On Wednesday 21 September (two days later) it crossed the FLD, but only just, and then on Thursday 22 September price moved down to create a nearly “textbook” FLD cross.
Note how price moved straight down to the 20-week FLD? When that happens it is a good indication that our analysis is sound. Price is now trapped in a gap pause zone between those two FLD’s, but it is expected of course to cross below the 20-week FLD as well, as each of the cycles up to at least the 18-month cycle confirm the peak formed on 6 September.
Here is a reminder of the long term picture:
Next week I will discuss whether the peak on 6 September 2011 was a peak of the 18-month cycle or of the 54-month cycle. Either way, the price of Gold is expected to drop for many months.