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FOREX PRO WEEKLY #2, AUD/USD, January 08 - 12, 2017

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jan 7, 2018.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Today, guys we will take a look at gold-related currency instead of looking at gold directly. Mostly because on gold we have the same picture as last week and the same patterns are still forming, including 3-Drive pattern on intraday charts. That's why today AUD will be in focus:

    Fundamentals

    (Reuters) - Australian shares rose to their best level in nearly 10 years on Thursday, with miners and healthcare stocks at the forefront as solid gains on Wall Street and strong oil prices also inspired buying in the region.

    The S&P/ASX 200 index rose as much as 0.5 percent to 6,102.2, its highest since January 2008. The benchmark had risen 0.2 percent on Wednesday.

    Aussie shares were propped up by miner BHP Billiton , which also has a large exposure to oil, and Woodside Petroleum, after oil prices shot through the roof over escalating tensions in Iran, a major oil and gas producer.

    “What’s going on here is that geopolitics is back in play as a result of the proxy war between the Saudis and Iranians across the region,” Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note.

    “But geopolitics has become a bigger factor now that the Iranian protest movement has launched into the open in the past week.”

    BHP rose advanced 1.4 percent to its highest since May, 2015, and was headed for its eighth straight session of gains, while Woodside surged to a near two-and-a-half year high.

    The Australian energy index climbed as much as 1 percent to its highest since July, 2015.

    COT Report

    It is very curious situation with futures positions on AUD. Chart shows that investors have closed massive volume of long positions right before Christmas holidays. At the same time, Australian economy shows very good statistics of export, equity market stands on upside rally. This drop of speculative positions looks a bit curious, if of course, this is not just some technical portfolios rebalancing.
    Whatever it is, after holidays this process continues. Last three weeks we see that position has turned to negative and open interest is rising. This simple combination tells that more and more new short positions were opened recently.
    In last research we've talked that some deep retracement should happen sooner rather than later. And this change in AUD sentiment mostly agrees with this suggestion. So, may be indeed, we will get some reaction on coming 1-2 weeks:
    upload_2018-1-7_12-25-29.
    Technical
    Monthly

    Monthly chart has not changed much since our last view. Our major bullish grabber pattern here is still valid. In January AUD slowly but continues upward action.

    Construction here stands rather simple and I like when this happens. We will not take a look at some long-term tools here, such as far Fib resistance levels, big AB-CD, but will focus only on 2-3 month perspective.

    After long-term drop market has reached Agreement at major all-time 5/8 Fib support of 0.7180 Fib level. Now market is forming a kind of flag action, and we're mostly interested in action inside the flag. Here we have AB-CD pattern that has not quite reached OP target. Now, right at flag's support line AUD has formed bullish grabber.

    This grabber totally agrees with idea of uncompleted AB-CD target. Thus, monthly chart lets us estimate major points of trading plan - invalidation point @ 0.75 and potential target @ 0.8160

    aud_m_08_01_18.

    Weekly

    Monthly setup suggests that we should find some chance to take long position, somewhere inside grabber's candle.

    AUD shows impressive weekly performance, starting with steep "222" Buy pattern. Last time we thought that may be we will get some pullback around 3/8 Fib level and MPP. But price has passed through it as it doesn't exist.

    Now we have second level on horizon - 5/8 major one and MPR1. Trend has turned bullish and market is not at overbought, so within 1-2 sessions price should hit 0.7885-0.7920 resistance.

    Combining technical barrier and sentiment weakness let's us suggest that chances on retracement out from this level looks solid:
    aud_w_08_01_18.

    Daily

    On daily chart we have two major levels. First one is 0.79. It is as MPR1 as natural resistance area. In fact here market keeps some harmony action a kind of reverse H&S. Of course, shoulders are too small to call it as H&S, but shape stands the same.

    Second one is 0.7730. This is the bottom of potential left shoulder by harmonic analysis. Also it coincides with major 3/8 Fib support area.

    Another tool that could generate additional patterns is DiNapoli upward thrust. It stands perfect, and in current environment appearing of B&B "Buy" around 0.7730 would be just perfect.

    At the same time, as AUD right now shows "V"-shape of reversal, and has shown no deep retracement yet, although some strong levels were broken already, odds of deep retracement increases significantly. Especially on a background of recent CFTC data. That's why we do not exclude chances that as B&B trade will be completed we could get deeper AB-CD action, before market will continue monthly trend.

    The same conclusion we've done yesterday from EUR and DXY analysis. Thus, AUD could follow major FX market trend.
    aud_d_08_01_18.

    Intraday

    On hourly chart we do not have a lot of issues that we could stick with. Market shows very smooth upside action. More or less reliable AB-CD that is based on "222" Buy pattern is shown on the chart.

    This ab-cd shows XOP target at the same 0.79 area. We do not have any other patterns yet here. May be AUD will form something as soon as price will reach daily target.
    aud_1h_08_01_18.

    Conclusion:

    AUD has positive fundamental background. CFTC data shows bearish sentiment that agrees with our idea of possible retracement. Technical analysis points that it should start somewhere from 0.79 area as major resistance level will be met.

    The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
     
  2. shahsavari

    shahsavari Private, 1st Class

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    Thank you very much
     
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  3. RahmanSL

    RahmanSL Major

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    Sive, belated Merry X'mas and Happy & Fantastic new year 2018......as always, great analysis and insight. I will keep watch and grab couple shorts at the 0.79 levels :)

    Thanks and all the best
     
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices inched down on Tuesday amid expectations for more U.S. interest rate hikes this year. Spot gold was down 0.1 percent at $1,319 an ounce by 0314 GMT, after falling as far as $1,315.40 early in thesession. Last week, prices touched their highest since Sept. 15 at $1,325.86.
    U.S. gold futures were mostly unchanged at $1,320 anounce.

    The dollar hit a more than one-week high against a basket of other major currencies on Monday, pressuring gold. But,the greenback fell to a session low of 112.49 yen on Tuesday after the Bank of Japan trimmed the amount of its buying of Japanese government bonds.

    Investors are betting on further U.S. interest rate hikesafter Friday's payrolls data did nothing to challenge theoutlook for monetary policy tightening by the U.S. FederalReserve. Atlanta Fed President Raphael Bostic, who is a voting member of the central bank's policy board, said on Monday that two hikes might be needed in 2018, in light of weak price pressures.

    "Gold will be under pressure (in the short term) as the dollar will strengthen on U.S. tax reforms and rate hike expectations", said Ji Ming, chief analyst at Shandong GoldGroup. "However, the market will get used to the rate hike expectations soon and the dollar will lose its strength, pushing gold higher," Ming added. "We can expect prices to go past 2017 highs in the second half of 2018."

    Gold is highly sensitive to rising U.S. interest rates, asthese increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Spot gold may test resistance at $1,329 per ounce, as suggested by a Fibonacci retracement analysis and a triangle,according to Reuters technical analyst Wang Tao.

    "Support for gold is at $1,311.40. Moving average convergence divergence and momentum indicators are biased to the upside and we remain bullish on gold," ScotiaMocatta analysts said in a note.


    On Gold market nothing unexpected has happened. In fact, flat standing here, as well as on AUD is another reason, why I think that on EUR upside action is not done yet...

    So, on gold our primary object is thrust. Potentially it could give us some DiNapoli setup - either DRPO "Sell" or B&B "Buy". Both will be welcome. Market has shown very strong action, formed upside reversal swing but no deep retracement has followed yet.
    gold_d_09_01_18.

    Still, intraday charts suggest that some minor upward continuation, somewhere to 1330 area still should happen. Thus, on 4-hour chart we have clear bullish dynamic pressure:
    gold_4h_09_01_18.

    While on hourly - triangle that everybody are talking right now and our potential 3-Drive Sell with the same 1330 destination point. 3rd drive could take shape of butterfly as well here:
    gold_1h_09_01_18.

    So, depending on your time frame, you could watch for three different setups - upside continuation, bearish patterns around 1330 area or, as we do - some daily DiNapoli pattern, based on thrust.
     
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices slipped on Wednesday as a surge in U.S. treasury yields and an ongoing rally in equities dented the precious metal's safe-haven appeal.

    Spot gold was down 0.1 percent at $1,311.56 an ounce by 0234 GMT. It declined 0.6 percent on Tuesday, in its biggest one-day drop in a month.

    U.S. gold futures were down 0.1 percent at $1,312.50 an ounce on Wednesday.

    Benchmark U.S. Treasury yields hit a 10-month high on Tuesday after the Bank of Japan tweaked its bond-buying programme. Wall Street's major indexes extend the New Year rally to record levels into a sixth day on Tuesday, but Asian shares slipped on Wednesday on profit-taking.

    "We are wary about going long on gold at these levels... The spike in U.S. treasury yields is an obvious negative, as is the fact that the dollar is now quite oversold against a number of currencies," said INTL FCStone analyst Edward Meir. "We are particularly concerned by the latest CFTC data showing dollar short positions at multi-year highs and so a short-covering rally cannot be ruled out".

    A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.
    The dollar index, which tracks the greenback against a basket of six major rival currencies, was down 0.1 percent at 92.423 . It touched a more than one-week high at 92.640 on Tuesday.

    The U.S. Federal Reserve should keep interest rates low so that wage gains accelerate and inflation rises, Minneapolis Federal Reserve President Neel Kashkari said on Tuesday.

    Investors are betting on more U.S. interest rate hikes after last week's payrolls data did nothing to challenge the outlook for monetary policy tightening by the U.S. Federal Reserve. Higher rates could dent demand for non-interest-paying gold.

    "From a technical point of view, the area $1,300 now represents a support. If gold manages to remain above this level, markets could see this as a signal of strength from the buyers," said ActivTrades chief analyst Carlo Alberto de Casa.

    Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.35 percent to 831.91 tonnes on Tuesday from Monday, the biggest drop since Dec. 18, 2017.


    On gold market we're mostly watching for daily patterns that are based on recent thrust. In current technical environment, appearing of DRPO "Sell" seems more probable as our major AB-CD COP target @1330 has not been met yet. Thus, on second top of DRPO gold should reach it and trigger major retracement:
    gold_d_10_01_18.

    This idea is confirmed by price behavior on intraday chart. Overall price action mostly reminds some consolidation rather than reversal as we do not see any signs of bearish thrusting action there. It could indicate that market is preparing and building an energy for final leg up.
    Now we have perfect match between Drives' extensions of our possible 3-Drive "Sell" pattern. 2nd drive now takes a shape of "222' Buy as well, although it's visuality is not perfect.
    gold_1h_10_01_18.

    That's being said, as another upside leg is still possible, we should wait either when it will happen, or when gold will show clear signs of reversal, before taking any short positions here...
     
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  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) Gold prices rose for a second day onThursday, extending the gains in the previous session when prices climbed to the highest since September, as dollar weakness and a flagging rally in equities enticed investors to buy the yellow metal.

    Spot gold was up 0.2 percent at $1,318.98 an ounce by 0242 GMT. Prices rose to as high as $1,326.56 an ounce on Wednesday, the most since Sept. 15. U.S. gold futures were little changed at $1,319.10an ounce.

    Gold prices on Wednesday rose over 1 percent as the dollars wooned after a report that Chinese officials had recommended slowing or halting purchases of U.S. Treasury securities. Officials reviewing China's foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, Bloomberg News reported on Wednesday, citing people familiar with the matter.

    The U.S. dollar fell to its lowest since November against the Japanese yen and weakened against a basket of major currencies on Wednesday after the report. It fell 0.1percent to 92.29 on Thursday.

    "Rising oil prices and strong global growth suggest gold will remain supported as investors look for inflation protection," said Stephen Innes, APAC head of trading at Oanda. "Also, a highly anticipated stock market correction is providing support on dips which continues to support the bullish gold narrative."

    Oil prices held near three-year highs on Thursday, supported by a surprise drop in U.S. production and lower crude inventories.

    The rally that has started this year in Asian shares paused on Thursday as concerns about the U.S. administration's protectionist stance hit Wall Street while U.S. bonds were dented by the speculation that China may curtail buying.

    "Gold could test $1,327 in the short term and above which $1,362 will be opened ... Global equities are running at high level of exuberance, confidence and valuation extreme which in short stands for bubble," said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services.
    "The belief" this time it is different" is all set to get arude shock."

    Spot gold looks neutral in a range of $1,311-$1,329 perounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

    Meanwhile, the holdings in the SPDR Gold Trust , theworld's largest gold-backed exchange-traded fund, fell 0.35 percent to 828.96 tonnes on Wednesday from Tuesday. Holdings fell for a second straight day on Wednesday.


    On Gold market rally that we've expected has happened, but again - it has not reached yet major target. On daily chart situation mostly stands the same as we continue to wait for two issues here. They are - DRPO "Sell" pattern and completion of 1230 COP target.
    gold_d_11_01_18.

    On intraday charts, despite strong action recently, major target has not been met, 3-Drive "sell" has not been completed. It means that chances on upside continuation now stands significant. Upside momentum, although it was due fundamental news, still stands here.

    I suspect that we could get butterfly "Sell" pattern because 1.27 extension of recent retracement (that could be left wing), precisely coincides with major 1330 area:
    gold_1h_11_01_18.

    So, if you're bearish - wait for 1330 target will be hit. If you want to take scalp upside trade to 1330 target - try to find some upside continuation patterns inside current consolidation as we did yesterday - found perfect 15-min "222' Buy right before rally has started...
     
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices rose for a third straightsession on Friday to their highest since September as theslumping dollar drew investors to buy the yellow metal. Bullion is on track for its fifth weekly gain.

    Spot gold edged up 0.3 percent to $1,326.68 an ounceby 0318 GMT. Prices rose their highest since Sept. 15, 2017, at $1,327. Gold is up 0.5 percent for the week so far and the streak of weekly gains is the most since the week ending April 14. U.S. gold futures were up 0.3 percent at $1,326.90 an ounce.

    The dollar index , which measures the greenback against six rival currencies, fell to its lowest since Sept. 20,2017, at 91.689. The euro jumped against the dollar as the European Central Bank signalled it could begin to wind down its 2.5 trillion euro ($3.01 trillion) stimulus program this year. A stronger euro potentially boosts demand for gold by making dollar-priced bullion cheaper for European investors.

    "There is a lot of doubt on how long prices have run from here ... Prices have only risen despite the Fed raising interest rates and main driver has been the U.S. dollar, which we continue to see help gold run higher in the first quarter," said Brian Lan, managing director at dealer Gold Silver Central inSingapore.
    "Gold has to breach the recent high of $1,327, above which prices can touch $1,360."

    Spot gold is expected to test a resistance at $1,329 per ounce, with a good chance of breaking above this level and rising more to the next resistance at $1,341, according to Reuters technical analyst Wang Tao.

    The greenback was also under pressure after data showed producer prices in the United States fell for the first time innearly 1-1/2 years in December amid declining costs forservices. Weak inflation at the producer level could add to concerns that the factors restraining inflation could become more persistent and result in the U.S. Federal Reserve being more cautious about raising interest rates this year. Higher rates could dent demand for non-interest-paying gold. Investors will be watching the U.S. Consumer Price Index(CPI) data due later on Friday, which is expected to show inflation likely increased 0.2 percent in December after rising 0.4 percent in November.


    Technical view today stands rather simple. As you can see our trading plan for the week was perfectly completed, and now we could say that mostly gold has reached 1330 target. According to our view - somewhere around 1330 downward retracement should start. May be not today, may be gold will flirt a bit with this level, but it should start.
    On daily chart we will watch for DRPO "Sell" pattern, as the half of it is already in place - thrust up, close below 3x3 DMA, close above and making new high. Now for final confirmation we need just second close below 3x3 DMA:
    gold_d_12_01_18.

    So you may stuck with daily DRPO, but there is another way to act. In Fact, on hourly chart our 3-Drive "Sell" has been completed and should be triggered soon. Besides, 3rd drive takes a shape of Butterfly "Sell" which is reversal pattern by itself.
    Thus, you could anticipate DRPO confirmation and base your trade on these two reversal patterns:
    gold_1h_12_01_18.

    Now you just need to decide, whether you want to deal with this setup at all...
     

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