Thursday, October 6, 2016

2016.10.05 Gold Cycle Model Chart

2016.10.05 Gold Cycle Model Chart

















A major divergence between the predicted price and actual price has occurred, but there is no rightward phase shift in the predictive curve at the moment.  Looking back at the model history, this level of divergence where the Z-score exceeded 3.77 occurred a few times.  In 1973.08.15, 1974.07.04, and 1980.03.27.  On all those occasions, the actual price resolved to the upside within a six week period.  So, the model may be broken, always a possibility, or a similar historical reversion will occur within a short time period.  A previous model run is shown below and here on the blog.

2016.08.12 Gold Cycle Model Chart

4 comments:

Diego said...

Thank you Paolo.
I remember Jim saying "they are going to fight it with tooth and nails"...
And a crowbar! ;)

Regards, Diego.

Anonymous said...

Hi Paolo,

I have to admit that the mechanics of the gold market are not my strong point, but I'm seeing "value" in an opportunistic long from multiple viewpoints, including 'contrarian' as most would be expecting further drops from the developing Bear Flag formation. I have an order in at the moment, but am 50:50 as to whether to maintain it, since gold seems to be rather challenging for my trading psychology (something for me to work on I guess).

I'm looking forward to your next XOI forecast, volatility on daily and 4-hourly timescales suggest a trending price move ahead, but no indication of direction though I recognise that I'm biased long. I'm expecting a shake-out to short-term lows before a trending move higher, though hopefully not the opposite if I'm wrong!

It could also just take off from here, though I find that a challenging proposition given the strong selling response from last week's highs. Of course that scepticism, even on the part of acknowledged bull such as myself is perhaps what "could" take oil higher from here.

The weeks of whipsaw since early October have bled out Bulls and Bears alike, including myself, so survival balanced with not missing the start of the "true" trend seems to be the order of the day. Hence my biased expectation of a fake-out to finish off one side, though I've got buy orders waiting with sensible stops.

Kind regards,

Mr. Anon

Paolo said...

I ran the XOI cycle model since it was about that time.

Anonymous said...

Hmm ... interesting, there's something about current gold movements that has encouraged me to take a closer look at a long-term position. I shouldn't rely on intuition, but a great of evidence both technical and fundamental, most of which just is above the "noise floor" of mainstream media and the blogosphere, each of which can be easily dismissed out of hand, altogether compels to take a closer look and reinstate my buy order at $1300 (starting off small as gold is not my preferred trading vehicle - at least presently).

Kind regards,

Mr. Anon