Wednesday, May 11, 2011

Gold - 4 Hour chart update

Gold made it back above the 50% Fibonacci retracement level of its most recent decline from its record price but was unable to maintain its footing over that level. That led some of the longs to bail out and enticed some short selling. Price then fell below $1500 once again which will need to be regained to give the bulls the edge in this market.

Gold is caught in a tug of war beween speculative selling related to hedge fund algorithms and safe haven buying on account of sovereign debt fears in Europe. In terms of the Euro, while it is weaker today, it is actually holding fairly well compared to the massacre across the rest of the commodity complex.

I am optimistic that this market is entering a consolidation phase and is carving out a new trading range. Right now we have $1520 on the top and $1460 on the bottom until we get some subsequent levels to form on the chart.


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7 comments:

  1. Lost In TranslationMay 11, 2011 at 10:55 AM

    Dan, why did you use the 5/2 high instead of the 5/1 high for the retracement calculations?

    Thanks for all the analysis.

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  2. AnonymousMay 11, 2011 at 10:56 AM

    thanks for the update Dan. USD did get another spike up which is adding some selling pressure on gold.. My question is can we turn around for june high? or are we on our way to produce a low instead. Will be watching that 1460 level..

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  3. altanaMay 11, 2011 at 11:15 AM

    Dan - Can you have a look at that ? http://pricewatch.pro/images/Screenshot4.png

    Long term Fibonacci levels could indicate that we have a ceiling for gold for some time.

    What do you think ? it was bloody accurate for whole this raid.

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  4. MarkMay 11, 2011 at 11:19 AM

    GDX/GLD at yet another new low. This is exactly like a repeat of the 2008 crash in the HUI. Ratio Traders scored huge once again. So far, the HUI has a 90% success rate at failed breakouts. No wonder the ratio traders are emboldened to push their bets with insane leverage. Huge moneymaker every time. Now we wait to see if anyone decides to cover these shorts, or will they drive it down even further?

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  5. RichMay 11, 2011 at 11:27 AM

    I hope the HUI holds at 520. I really don't want to see it drop down to the 500-495 level.

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  6. Trader DanMay 11, 2011 at 11:30 AM

    Mark - the silence on the part of many CEO's of these mining companies while their stock values are destroyed is deafening. When there is no opposition the hedge funds can pretty much do what they please with the shares. What happens then is that traders get programmed into doing the same thing over and over again and thus the ratio trade becomes a self-fulfilling prophecy of sorts as owners of the shares give up in total disgust.

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  7. MarkMay 11, 2011 at 4:05 PM

    Dan, perhaps we should oust the CEO's of NEM, AEM, ABX, etc. recruit the CEO of some commercial REITs or some upscale retail companies to take over their operations...After all, they have done a stellar job managing Wall St. expectations and cranking out product during the worst recession in 3 decades. Imagine what these guys could do if they ran a mining company with gold at $1,500 and higher.

    ReplyDelete

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