I always get excited when the FOMC is about to raise rates. Raising interest rates increases the cost to borrow the USD, which decreases demand for the USD. This creates a cycle of USD swings. As interest rates are increased, the USD decreases, driving inflation higher. The irony is that most believe that interest rate increases increase the value of the USD. As we can see from looking at interest rate changes around the world, this theory does not hold water.
SO, with that little background said, this is a bullish view of the Gold market. (If it fails to go up after tagging the rising trend line, I will have to consider a much more bearish view of the Gold market.
Currently, I have a bullish outlook on the US stock market indices, which could push the Gold market lower. However, I believe we have entered an ''all - market bull'', as in every market will go up, thanks to the 2008 flood of liquidity. Stocks, Commodities, Energy, etc. The one exception could be the Bond market, which is at a 40 year bull market. This could be ended by the interest rate increases.
Here is a combined map of short-term + long-term Fibonacci retracements, and Fibonacci timing band.
Of note: The green lines are both the 38% fib retracements of the recent rally and the bull market that started in 2000. If we can bounce off the rising trend line and hold this level on the weekly or monthly candles, this would be an extremely positive sign.
2: If these can be trusted... and the timing band can be trusted, we should have either a bottom or top in the gold market July 2018. If we bounce off the green and rising trend lines, we could have our next intermediate top at 1500$ by the end of July or June.
I'm currently holding April calls on the QQQ and looking to pick up NUGT calls at the end of this week after both the FOMC interest rate decision and ideally a capitulation sell-off in the gold market. These two events could clear sentiment levels low enough to drive a follow-up bull rally in the gold market. In my opinion, a small all-or-nothing option play is the most risky play on this, but also, could pay off significantly because of the extreme sentiment caused by these 2 events.
We will see what happens Wednesday!
Feel free to comment, question and debate. I'd love the feedback.
-JT
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