## THE 360-DAY CYCLE AND MEAN REVERSION FORECASTS GOLD ABOVE $3100

Date Published: September 28, 2024

Author: Patrick MonteDeOca

**Market Analysis Summary**

**1. 360-Day Trend Momentum and Price Momentum with Probability Models**

**Current Price**:**2668**(Gold Futures Contract)

**Trend Momentum (9 SMA at 2375)**

**Bullish Trend Confirmation**:- The current price of
**2668**is above the**9-day SMA of 2375**, indicating a**bullish trend momentum**. **Probability Assessment**:**Staying Bullish Above 2375**: The probability that the price continues an upward trend while remaining above**2375**is relatively high, estimated at around**75-80%**. This implies a strong sentiment, and traders should consider staying long.**Turning Neutral Below 2375**: If the price falls below**2375**, there is an increased probability (around**50-60%**) that the bullish trend will be negated, potentially leading to a consolidation or a shift to neutral.

- The current price of

**Price Momentum (VC PMI at 2447)**

**Bullish Price Momentum**:- The closing price above the
**VC PMI Yearly Price Momentum Indicator of, 2447**supports a**bullish price momentum**. **Probability Assessment**:**Above 2447**: With the price staying above**2447**, the probability of maintaining bullish momentum is estimated at**70-75%**, suggesting that the trend will likely continue upward.**Below 2447**: A close below**2447**would reduce the probability of further bullish momentum, turning the outlook to**neutral**and indicating caution for traders.

- The closing price above the

**2. Key Price Levels and Mean Reversion Analysis**

**Resistance Levels (Sell Zones for Long Positions)**

**Sell 1 (2929)**and**Sell 2 (3190)**:- These levels represent resistance areas where the price has a high probability of
**reversing or consolidating**. **Probability and Mean Reversion**:**Probability of Reversal**: When the price reaches the**2929-3190**range, the likelihood of a**mean reversion**back to lower levels is estimated at**65-70%**. These levels act as major resistance points, which are likely to attract selling pressure.**Profit-Taking Strategy**: Traders should**take profits on long positions**as the market approaches these levels. Given the resistance, there is a high chance that price momentum will weaken, creating a favorable condition for mean reversion.

- These levels represent resistance areas where the price has a high probability of

**Support Levels (Buy Zones for Long Positions)**

**Buy 1 (2186)**and**Buy 2 (1704)**:- These levels are significant support areas that provide opportunities for
**buying on corrections**. **Probability and Mean Reversion**:**Support at 2186-1704**: The probability of a**reversal**and**mean reversion**from these levels is approximately**70-75%**. Historically, these levels act as critical zones where buying pressure often outweighs selling, leading to price recovery.**Entry Strategy**: Traders should**enter long positions**on a reversal at these levels, as the market is expected to revert to its mean, moving back towards higher resistance levels like**2447**or**2929**.

- These levels are significant support areas that provide opportunities for

**3. Trading Recommendations with Probability and Mean Reversion Models**

**Short Positions:**

**Take Profits on Short Positions**:- If the market moves down to the
**2186-1704**support range, traders should consider**taking profits on short positions**. The probability of a price reversal from these levels is high, indicating that a continuation of the short position may become increasingly risky. - Given the strong support, the
**mean reversion model**suggests that a reversal and subsequent upward movement are probable.

- If the market moves down to the

**Long Positions:**

**Enter Long at Support (2186-1704)**:- The
**2186–1704**levels serve as attractive entry points for long positions, with a high probability of mean reversion. Traders should look for**reversal signals**in this range to enter long trades. - This strategy takes advantage of the market’s tendency to revert to the mean, especially after reaching an oversold condition at key support levels.

- The
**Stop-Close-Only Orders**:- Use the
**1704**level as a**Stop Close Only and Good Till Cancelled (GTC) order**. If the market closes below this level, it would indicate a break of major support and a possible shift to a bearish trend. **Probability of Breakdown**: A close below**1704**could signal a change in sentiment, with a**60-65% probability**that the market may continue to move lower.

- Use the
**Take Profits on Long Positions**:- As the market reaches the
**2929-3190**range, traders should consider**taking profits**. The**mean reversion model**indicates a high likelihood of price facing resistance and pulling back from these levels, making it a favorable zone to lock in gains.

- As the market reaches the

**4. Summary and Trading Plan for the 360-Day Cycle**

**Bullish Trend and Price Momentum**:**Current Trend**: Bullish above the**9-day SMA of 2375**and the**VC PMI of 2447**.**Probability of Continuing Uptrend**: Estimated at**70-80%**as long as the market stays above these key levels.

**Profit-Taking and Entry Strategies**:**Take Profits at Resistance**: Use the**2929–3190**levels as profit targets for long positions, as the probability of mean reversion is high.**Enter Long on Corrections**: Look for buying opportunities at**2186-1704**with a high probability of mean reversion to higher levels.

**Risk Management**:**Stop-Close-Only Level**: Use**1704**as a critical stop-loss level to manage risk on long positions. A close below this level would imply a shift to a bearish outlook.**Mean Reversion-Based Reentry**: After exiting at a stop, consider reentering long positions if the market shows a recovery above key support levels.

**Conclusion:**

Using the **probability** and **mean reversion models** alongside the **VC PMI indicators** allows for a strategic approach in trading gold futures during the 360-day cycle:

**Stay Long**while the market remains above**2447**and**2375**, with a high probability of continuing upward momentum.**Take Profits**at**2929-3190**to capitalize on the likelihood of resistance.**Buy on Corrections**at**2186-1704**, where the probability of mean reversion is strong, providing an excellent opportunity to go long.

**Disclaimer:** The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts. It is for educational purposes only.