Next Week Pivotal With FOMC News

Next week is shaping up to be pivotal. Wednesday’s FOMC announcement will set the tone. Market participants will be looking for guidance concerning interest rates and balance sheet reductions.

From a cyclical and technical perspective, metals and miners are in the ideal position to form intermediate tops next week. Key resistance in gold arrives between $1310 – $1315. For silver, there is sound resistance around $16.20.

If/when tops become likely, I’ll look establish net-short positions into February/March (the next cycle low).

If the Fed surprises and cancels their balance sheet wind down, metals and miners could break above key resistance. In that event, I’d wait for confirmation (make sure it’s not another false breakout) and then become net-long.


Breaking the 88.15 low set in early 2018 would establish a bear market in the dollar and bull market in commodities. Tops and bottoms alternate on a 16-year basis. The next major low for the dollar is poised to arrive in 2024.


In the weekly chart, a breakdown below the red cycle trendline would be enough to support a dollar bear market, in my opinion.


A sustained breakdown (below 94.64) after next week’s Fed meeting would support a failed cycle and lower prices. That, in theory, would be positive for commodities and gold.


From late 2015 to 2018 gold’s 6-month cycle averaged 26.5 weeks between bottoms. The absurdly stretched August cycle clocked in at 35-weeks. The current cycle, is sufficiently mature (24-weeks), from a cyclical perspective, and prices should begin dropping into the next intermediate low. Volume has been shrinking since mid-October, and the RSI (above) is at a level that signaled earlier peaks. From a technical and cyclical perspective – prices should be topping. A sustained weekly breakout above the green trendline would support a new multi-year uptrend in the yellow metal.

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