Video duration 7min 33sec.
Market outlook video reports for 2021:
Introduction: Market outlook 2021 gold futures
Hi, everyone. I’m Al Brooks. Thank you so much for your attention. At the end of every day, I look at charts to try to get an idea about what to expect for tomorrow.
I do the same at the end of the week, the end of the month, and now at the end of the year. This is the New Year’s Day weekend, and I made a series of charts to create videos to give my thoughts about what to expect for major markets in 2021. I made six different videos – Emini, the bond market, the Euro versus the dollar Forex market, gold, crude oil, and Bitcoin.
Now, I want to add a disclaimer up front: with every additional tick that we see, the outlook changes. I’m giving you my perspective as of right now, the start of 2021. I hope that you find the information useful.
Gold futures market outlook for 2021
Monthly chart for gold futures
Here’s my take on gold futures for the coming year.
This is the monthly chart of gold. We had an extremely strong rally here. We had a spike down and a channel. We broke to the upside, a bull breakout of the bear channel. We have a Double Bottom bull flag and we’ve been rallying since.
A bull breakout above a bull channel. A Parabolic Wedge Top and a reversal, and we have a Parabolic Wedge Top and a reversal here as well.
Parabolic Wedge Buy Climax
When you have a Parabolic Wedge Buy Climax, it’s pretty common to get a Trading Range, and the bears hope for a reversal down, and the bulls hope for trend resumption up.
Here we had a Double Top Lower High, a bear breakout, and more than a Measured Move down. Are we going to get the same thing here? I don’t know. We had a High 2 bull flag – High 1, High 2 – but instead of going up, we went sideways and then eventually went down. Now we have another High 2 bull flag – High 1 and High 2, a High 2 buy signal bar. The bulls hope that we just continue up. Bears hope that the reversal fails and we go sideways and then down, like we did here. I do not think that’s going to happen. We may go more sideways, we may go down a little bit, but I think gold is going higher. This looks like a resumption of the bull trend and not a bull leg in a Trading Range, and therefore we should get above this high.
Bull trend resumption
So why do I think this is different from that? Because I think this is a resumption of this bull trend, and not a leg in a Trading Range. The bears hope this is a leg in a Trading Range and that we form a Double Top. I think it’s more likely that this is strong enough to be a resumption of the bull trend, and therefore I think we’ll get well above this high.
High 2 bull flag like here – here it failed and we went sideways. Here, I don’t know if it’s going to fail. I do think we’re going up here, but we may go sideways more before we go up there, and we may even go down before we go up. But chances are we’re going up.
The bears are hoping that the rally stalls and we go sideways, like this, because once they have a Trading Range they have a 50% chance of a reversal down. Right now they might have a 30% chance of a reversal down, but if they can get the market to go sideways for a number of bars, they’ll have an increasing chance that the rally will fail, and that we’ll go back down.
The more bars the bears get in a Trading Range, the more the probability of a reversal down goes up. And if you have 10 or 20 bars in a Trading Range, the probability of a reversal down like this will go up to 50%.
Very strong rally. Second leg up was likely. Instead we got second leg sideways – one, pullback, two – and then we got a deep selloff. I think this is a bigger second leg up from this. This is so strong, you expect a second leg up. This could’ve been the second leg up. I think instead what we got was a deep pullback and a bigger second leg up, and I don’t think this second leg up is going to stop here. I think we’re going to go higher.
This is also strong enough for a second leg up. Will we get a Lower High for the second leg up, second leg sideways and then down? I still think this looks more like a resumption of a bull trend, than it does like a leg in a Trading Range, and therefore I think we’re going higher.
Weekly chart for gold futures
Weekly chart. We’re breaking above the top of a bull channel and we’re reversing. We have three legs down – one, pullback, two, pullback, three. A Wedge bull flag. You’d expect a couple legs up – one, pullback, two. However, this is also a Wedge – one, two, three. You’d expect a couple legs down, and it’s possible that this is one, pullback, two. So we don’t know if this is the extent of the correction from this Wedge rally, or if we’ll get a bigger second leg down. It’s possible that this whole thing is a first leg down and that we bounce for a couple legs and then get a bigger second leg down. We don’t know yet. We need more information. But whether or not we go sideways to down, chances are we’re going higher.
We have a Wedge – one, two, three. You’d expect a couple legs in the opposite direction – one, pullback, two. But we have this bigger Wedge, and it’s possible that this is one, pullback, two. So we still may go down to this low or this low before we go higher. But in either case I think we’re going higher.
And that is my take on gold futures at the start of 2021.
This is what I mean. So if we do sell off, we’ll probably form some kind of a Double Bottom. Could be a Lower Low Double Bottom. But chances are, because the monthly chart is so bullish, no matter what we do here over the next several weeks, several months, we should go higher.
Again, I’m Al Brooks. Thank you so much for your attention. I hope that you found some of this information useful. I want to wish you the best for the coming year as a trader, and I also want to wish you and your family a very wonderful 2021.