At the moment gold is at a critical crossroads. If it can move above $1,375, it will confirm that an intermediate degree bottom occurred last month at $1,251, and start a pattern of higher highs. If however gold continues lower and breaks below the $1,251 level it will confirm that an intermediate degree decline is still in progress and the recent bounce was nothing more than another bull trap to work off the short-term oversold levels.

Actually, based on my cycles analysis, I think we can even narrow the band a little tighter. If gold can move above the Oct. 28 high at $1,361 over the next several days, it would confirm that this daily cycle has become right translated and complete a new pattern of higher highs and higher lows.

If, however, gold moves below Friday’s half cycle low of $1,305 it would confirm that the daily cycle has topped in a left translated manner and the odds would then be very high that the October low at $1,251 is going to be broken over the next 2-3 weeks.