All of the gold's problems can be summed up by looking at this US dollar cash chart. Individual contract months will have different patterns as they show that the US dollar has more upside to go. I sure would like to have the recent pattern finish as an ending diagonal as that would mean a sharp reversal in the US dollar
. Gold has rallied a bit already this morning and hopefully there will be more upside in gold than just a knee jerk reaction to cimate talk l events in Europe.
As a potential impasse this US dollar rally would be far from over, but it would have to be another wave 1 top and then another wave 2 bottom, which would then get close to turning this bullish phase into an impulse. If my degree all stayed the same, then I would have to be in a wave 1 in Minute degree.
Any potential decline I would be after would be a 5 wave pattern and if the US dollar gives us anything but an impulse pattern, then a quick wave counts review would have to be initiated.
Gold investors don't need or want this action with the US dollar, but most may be waiting for a bunch of fear buying in gold to justify a gold rally. Fear buying in gold just means fear selling in the US dollar, but all other inverse currencies must also behave as they have always done.
Our Canadian dollar is one of these currencies and this could be a problem as no huge rally in our CAD is in order just yet. Alberta oil sands may have to come to a standstill and metal in mines sent back to the shredders, before our CAD is going to rally. Before you know it Fort McMurrey will turn into Detriot, as jobs and real estate agents leave that oil town.
The good news is that the commercials added to their US dollar short positions, and market sentiment is still extremely high. The higher the bullish sentiment the less room there is where the market can absorb more bulls. In other words
, "Who is left to get on the US dollar bandwagon"?