Gold is on the verge of making a “death cross” (when the 50 daily moving average falls below its 200 daily moving average). It will probably do so early next week.
Conventional wisdom states that a “death cross” is bearish for the market. Is this true?
Here are the historical cases in which gold made a “death cross” for the first time in 6 months, and what happens next to gold.
Click here to download the data in Excel.
As you can see, gold tends to make a lower low sometimes within the next 2 months. The only cases in which gold didn’t make a lower low were:
- November 14, 1973
- March 1, 1988
- June 9, 2004
- October 24, 2006
In other words, gold made a lower low some time in the next 2 months in 18 out of 22 cases (82% of historical cases).
A logical target is for gold to retest its December 2017 lows.
Click here for more market studies.