Here is my take on the metal as of now:
it has made a nice recovery off of the low just below $1200. It is stalling out however at the resistance zone noted on the chart. That comes in near $1350 and extends towards $1360.
Bulls will need to push past this region soon or gold does run the risk of seeing some stale long liquidation which would have the potential to drop the metal back down towards $1280. Based on what I am seeing of this chart, if they do clear through $1360 there does not appear to be much in the way of overhead chart resistance until near $1390.
This particular indicator, which I detailed a while back on the site here is showing that the downtrend has definitely stopped. That is evidenced by the continued downward progress of the ADX line (dark purple) which is heading lower from a lofty 47 reading. Remember, a rising ADX indicates the presence of a trending market, either up or down is immaterial.
As far as the two directional indicators go, the red line or -DMI remains above the blue line or +DXI using this particular time frame for reference. This tells me that for right now the bears are still in control of this market and the downtrend has the potential to resume if any downside support levels give way.
If however the bulls can power through that overhead resistance, this indicator would more than likely generate a buy signal.
Other indicators are in a buy mode already but they too are showing signs of a stalling in upside momentum.
Gold had a strange and somewhat convoluted reaction to the Fed minutes as if it was unsure of what to do. First it moved a bit higher, then sold off strongly as players focused in on the statement dealing with the lack of inflation. Then later in the afternoon, the metal gathered strength moving back higher again as the focus shifted to the more dovish tone of the FOMC statement.
Confirmation of that was provided by the rally in the long end of the curve as bonds came well off their worse levels of the session and actually moved into positive territory about the same time as gold broke higher. Evidently, both the bond market and the gold market are now expecting no curtailment of the Fed bond buying program.
We may have to wait until FRiday to see if anything changes that current sentiment.
Good morning everybody,
ReplyDeleteOnce more, I'm in line with Dan's analysis, with slightly different tools.
I'll try to make a small recap here of what I see and how I used T.A recently, speaking under Dan's control if I write something silly.
1) MONTHLY time unit.
July ended yesterday, so what do I see :
http://s14.postimg.org/z9gcpcnkx/gld_m.png
- I started to write an upwards Andrew's pitchfork, but as you see, its median is going up very quickly. Unless we have a V bottom and some real strength in gold, we will probably fail to reach this target.
- therefore, I wrote another pitchfork, in green, which I think could be a reasonable target for middle term, as it's also in the range of the monthly ema15. I'm using ema15 often as a target of a retracement within a continuing trend (here a bearish trend).
- in august, the mlh inf of the upwards pitchfork acts as a first support zone, at 1208 $ = the fibo level of 750-1950. Below, I see an ultimate strong support level in the vicinity of 1150 $, with the mlh inf of the other pitchfork and the upwards channel line I traced.
2) 2-DAY time unit.
I chose this time unit vs daily sometimes, because it brings additional information :
http://s23.postimg.org/byih04jij/gld_2d.jpg
- we can see that the prices stopped precisely at the convergence of 2 targets previously identified, i.e the median of a pitchfork, and the retracement of fibonacci. Prices logically decided to wait a bit there, after the mini rallye.
- the role of the fibonacci retracement levels of the 750-1950 appear very clearly on this time scale, and explain why 1348 is such a resistance.
- the ma20 on this time scale is NOT YET going up. It is better to consider that a trend is bullish when the ma20 goes up (it's an indicator used by many analysts, which helps decide which way the trades should be made). So it's still too early to conclude that we are in an uptrend on this time scale, especially with those résistances at 1350 just above our heads.
CONCLUSION : my decision making to go long again will depend on the smaller time units, especially I will watch on the daily time unit whether or not the short-term upwards channel is holding (now support at 1310 $), or if the 1350 $ area is giving way.
One final remark : when doing T.A, it is important to notice that the lines, supports and résistances indicated precede the price evolution and anticipate the next targets, etc... and not the opposite. Trying to draw lines afterwards to make the reality fit to one's wishes is a big risk if you start trading. Trying to see what the market tells you, and not what you want it to tell you is a constant exercice.
That's all for my sharing session today :)
Have a nice day all,
oops...I forgot about SILVER :)
ReplyDelete1) MONTHLY time unit.
http://s21.postimg.org/mgwev4bcn/slv_m.jpg
- since november 2008, at their bottom in 2013, gold and silver retraced respectively 62% and 78% of their upwards move, i.e two fibonacci levels, but a deeper retracement for silver.
- the median of the pitchfork is acting as a support for the close of every month. It may protect silver from a collapse, should copper break through 3 $ for example.
- just as in the case of gold in july, we've done the easiest part of the uptrend : going back from under the bollinger bands towards the inf bollinger band. There is not much to boast about from the bulls, and especially no reason to start being overconfident about the near future. The real challenge of reverting the trend is starting now.
2) DAILY time-unit.
http://s22.postimg.org/fz8wy0gsh/slv.jpg
As you can see, we are within TWO downwards channels at the moment, a main one (grey) and a short-term one (red).
In addition, the short-term smallish uptrend is giving way (blue).
It is hard to speak about a bullish trend now, even if silver may have bottomed (I sure don't know if it did).
- the daily MACD (9 20 7) is about to cross or not to cross its signal. It's interesting to follow as well in the next two days. NOT crossing the signal would send a bullish short-term omen. Not necessarily enough to go long only on that, of course, but I'm watching it.
Thanks Dan & Hubert.
ReplyDeleteDoes anybody have a guess what was the catalyst for the sharp fall yesterday morning from 1333 to 1306 dollar?
First I thought some FED member leaked info about the tapering but than the real statement at 2pm caused the opposite effect.
Hi Kris,
DeleteOn my point of view, as there are many market reactions considered as counter-intuitive to the news, I see the news as a timing opportunity for some participants to try and move the market, and increase short-term volatility, up, down, sometimes both ways to break the stops in a very short time.
So I'm not really paying attention to the content of the news at the time it's released, and the reason why it goes up or down...or both.
I'm only expecting an attempt to increase volatility when such news occur (maybe also because many market participants prefer to withdraw their orders and it creates an emptier market, therefore more volatiily? I'm not a specialist...), and I'm focusing on T.A.
Interestingly, the top of yesterday was indeed the median of the daily pitchfork, and the bottom was right in the area of the support zone (1308).
Maybe news helped the shorts to time their raid, but the next support zone proved to be unbreakable in the first attempt. I think after a few days stopped by the 1340 resistance, the time of the news rather than the news itself acted as the catalyst for the drop. But it's only my guess, but you asked for a guess, not a certainty :)
Sounds reasonable. thanks.
DeleteMaybe some market participant positioned himself big time on the short side and than pretended as if he had an insider information about the tapering starting next month. Made a few phone calls and than let the party roll. One might make millions of dollars like that in a few hours in a market already on the edge.
Of course this is just a speculation too.
Thank you Dan for the ADX chart. Dan, you are an example of what Christians stand for. I hope one day I could be such an example. I know it is each in his own way and I have found one of my forums.
ReplyDeleteHebrews 13:16 Phillippians 2:4 Luke 6:38 Matthew 25:35-40
James 2:14-17 Galatians 6:2 Matthew 5:16 Romans 15:1 and many many others.
Does the generally hit a low point when the positive and negative cross prior to an upward trend if gold goes into a bull?
I meant to say these verses are the work you are performing. Does the ADX Dark Purple line hit a "bottom" when the negative and positive ADX lines cross and the market change from bear to bull and vice versa bull to bear? If that is the case, is it below 15 as this short term chart indicates?
ReplyDeleteFor those of us who thought that printing trillions of phony dollars would have a big negative effect on the dollar and consequently gold and other stuff, its been a real shock that it hasnt had any effect.
ReplyDeleteArnie,
ReplyDeleteAs long as the Fed can control the Treasury market and manipulate the yield curve the effects of this phoney market continue. It is when other people money (US Tax Payers from now to infinity)forced through Presidential and Congressional leadership, manipulated through the CB's and fake paper markets, will their be a change. It may occur that the dollar continues to rise because it is still the best of the worst. Even though the dollar will continue to rise, the T's may increase, and I can even see that with the Comex failure and overseas demand gold could still rise. The world is so complicated now that I do not believe that any fundamental historical "economic truths" will survive in the short term to mid term. I believe however the long term will indeed usher in some type of new international trading platform, and combined with demand for gold, gold will remain standing. There is just such an international desperation fight against a tide that is so strong (deflation) and currency dilution, that the markets are all political reflect very little reality. The stock market for example. Proctor and Gamble's earnings were 50% of a year ago yet their stock is up today 1.5%???? I mean they are at all time highs and yet their earnings were down from last year. HOPIUM continues to drive the market.
The price flow does not look good. Gains cannot be maintained, and it makes for tasty scalping on the short side. 1300 is itching to be breached. If 1,320 level and, more specifically, the 1327 point cannot hold for more than a day, my 1,293 price is my cover for my intermediate short (several day hold).
ReplyDeleteI have a fully covered long physical position and that has been in effect since the 1632 breakdown.
Professionals primarily trade from the short side (80%). Anyone trying to make money on gold futures going long will have a much harder time making.
My day short was covered at 1312. The powers that be totally control this market, and if they want a sub 1,000 COMEX print, they will get it. Ask yourself, what are they willing to give up to get that? Pakistan has banned imports for a month, Vietnam is putting India-style rules into effect, etc. This will eventually make owning gold perilous in these last days.
Well, trading around the FOMC has never been so easy.
ReplyDeleteAlways buy stocks and short gold they day after, the road to riches for many hedge funds.
Amazing how Bernanke singlehandedly caused a stock market rally which is pricing in the greatest consumer spending boom every record with nary a whiff of inflation.
And Draghi is now jumping into the fray in an attempt to take the grandstand with more easing.
The Bernanke Fed Model will be copied for decades to come, proving that unlimited money printing and infinite fiat are the core tenets of wealth creation.
Boston Beer, NuSkin, and Haverty Furniture leading the Russell 2000 to world record highs, while gold tanks.
just covered my intermediate 1293 short faster than I expected. Sold another two contracts around 6pm right after the overnight opened sloppy and covered one of those as well at my price point... it's going down. CYA long physical holders.
ReplyDeleteforget the first two numbers. gold trades by 20's, then 10's and fives, then threes and sevens. traders love even hundred numbers. so do i. like printing money.