Gold lost $8.90/oz. last week to close at $1,137.10 but on Friday printed an engulfing bullish candlestick. Gold gained $22.90 on Friday marking last week's expected cycle low and closed on the 89-dma. The 89-dma is an important marker of regime change but beware past Pinocchio breakouts. Any breakout through the 89-dma will find next resistance close-by from the 8/21/15 high near 1,160.
Gold has been below the 61.8% retracement of the 2008 rally (wave 5) since July. Long-term, this opens the door for a possible return to that low near 700. A triangle forecasts a minimum decline in gold to 1,000.
Cycles indicate that an important high is due in October. A 4yr cycle low is not due until the first half of 2016 keeping the long-term outlook bearish.
Seasonality is bullish in the first half of October but manages to lose all its gains by month-end.
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