The broad seasonal patterns for Gold and Silver were illustrated in the 11/26/20 post “Important Silver and Gold Bottom in December 2020?” Today’s post focuses on more precise timing indicators – Lunar and Fibonacci time cycle.
Some people laugh when you tell them you and can discover market turns by examining lunar phases. The study of Full and New moons has been used effectively by traders for several decades. The moon affects many areas in nature, ocean tides are the most prominent. Phases of the moon can also have an effect on mass human Psychology.
Both Gold and Silver can have market turns near New or Full moons. New moons usually signal Gold/Silver tops. Full moons signal bottoms. There are exceptions when the cycle can reverse.
The daily SPDR – Gold Shares Exchange Traded Fund (GLD) from 2015 to 2017 illustrates evidence of some Gold lunar turns.
This time period was chosen because it gives two examples of the broad seasonal cycle discussed in the 11/26/20 post. Note the important Gold bottoms made in December 2015 and 2016.
Lunar phase signals don’t occur with every Full/New moon. Daily Stochastic is excellent in helping to discover effective moon signals. During this two-year period there where at least two New moon signals and at least four Full moon signals.
There is no rule as to how many days before or after a moon signal to use for leeway. Gold/Silver turns on the day of a New/Full moon are bullseye hits. I usually allow plus or minus two trading days from a New/Full moon as the range when a turn could occur.
The daily GLD chart 2019 to 2020 illustrate s recent activity.
The powerful Gold/Silver bull move from March 2020 to August 2020 could provide data to determine a Fibonacci time cycle turn. Occasionally the time length of a market’s rally/decline could have a Fibonacci relationship with the subsequent reversal. In this case the GLD- 100 – trading day rally could be matched with a 100 – trading day decline, Fibonacci ratio of 1/1 which also occurs on the 12/29/20 Full Moon.
Note that on 11/30/20 there’s a Full moon and GLD daily Stochastic has reached the oversold zone. Could a significant Gold bottom already be in place or very soon? Perhaps, we need to see what happens next week and into mid-December. The broader seasonal pattern allows for more decline into at least mid-December.
If it later appears a significant Gold/Silver bottom was made late November/early December – an entry to buy Gold/Silver could be made at next higher bottom.
An update on the precious metals will be posted next week.