Sive Morten
Special Consultant to the FPA
- Messages
- 18,697
Today guys, I still have decided to replace Gold with NZD. Situation on gold mostly the same as last week, while on NZD we have new interesting setup is forming...In the beginning I put just brief news on gold by Reuters:
(Reuters) - Gold was little changed on Friday as investors judged that a sell-off sparked by a rise in U.S. interest rates this week had run its course and the dollar weakened, making bullion cheaper for holders of other currencies.
Spot gold was up 0.1 percent at $1,254.24 an ounce by 2:19 p.m. EDT (1819 GMT), having earlier hit $1,251.05, its lowest since May 24. U.S. gold futures settled up 0.2 percent at $1,256.50.
Gold was on track for a second weekly loss and has fallen more than 3 percent from a high of $1,295.97 on June 6 as investors braced for the U.S. Federal Reserve to raise interest rates and signal its policy outlook on Wednesday.
Bullion is sensitive to higher interest rates because they push bond yields higher, increasing the opportunity cost of holding non-yielding gold, and tend to boost the dollar.
"Gold has been spooked by the hawkish tone from the Fed, which triggered some long liquidation both in futures and exchange-traded funds," said Saxo Bank analyst Ole Hansen.
Fears of more rate increases this year were heightened on Thursday by strong U.S. economic data, though housing numbers on Friday disappointed, pushing bond yields and the dollar lower.
"If the Fed were to follow a more aggressive approach, this could preclude any significant rise in gold prices for the rest of the year," Commerzbank analysts wrote in a note.
In other precious metals, silver was 0.2 percent down at $16.68 an ounce after tapping a four-week low at $16.62 and heading for a weekly decline of about 2.6 percent, its biggest in six weeks.
"Price action in both gold and silver of late seems to imply that traders still have plenty of short-term long positioning on their books," said OANDA analyst Jeffrey Halley.
COT Report
CFTC data shows clear bullish sentiment on NZD. Speculative net position has become bullish and open interest shows fast increase. At the same time long position stands far from total saturation. Now it is approximately 1.5K contracts while extreme numbers for NZD stand around 20-30K contracts
So, fundamentals background for NZD we've discussed last week and they haven't changed significantly. Thus, right now let's turn directly to technical setup that we could get here.
Technical
Monthly
Long term picture mostly stands the same and keeps bullish setup for NZD. If you remember our previous bearish context was based on flag breakout. But take a look what we have right now. This is brekout failure, or "bears trap". Price returns back inside the flag. Usually after some time it leads to opposite breakout.
Second - price holds above YPP. It has been tested but now we see confident upside bounce. This action confirms existence of long-term bullish sentiment. Once price was able to hold above YPP, next logical Pivot target is YPR1 at 0.7678 area.
Finally, NZD has formed bullish grabber pattern. It also suggests action above previous tops and mostly confirms possible action to YPR1. Right now price action takes the pause as kiwi has reached long-term support/resistance zone here (yellow line) and it is strongly overbought on lower time frames.
But in general, this long-term chart confirms CFTC data that shows bullish sentiment.
Weekly
Although long term perspective on NZD really looks thrilling, weekly chart shows that market has reached temporal barrier. In fact we have two different channels here. One is long-term, on weekly chart and second one is minor - it is mostly flat and reminds wide flag consolidation.
Thus, right now price has reached it's border and, take a look - weekly overbought. It means that in nearest time price will have some problems to keep the same pace of upward action and chances on retracement significantly increases:
Daily
On daily chart we also see some moments that could point on possible retracement. Here price also has hit overbought and right now NZD is coiling around major 5/8 resistance area. In fact, price is forming DRPO "Sell" pattern here. Despite overall bullish sentiment, DRPO is logical here because kiwi stands overbought on weekly chart and deeper retracement on daily is reasonable. And DRPO precisely leads to deeper retracement compares to B&B trade.
As you can see thrust looks nice, we already have 1st close below 3x3 DMA and close above. As soon as we will get 2nd close below - we will get DRPO "Sell" pattern. Minimal target stands around 50% Fib support of the thrust, i.e. 0.71 area.
4-hour
Here reversal process could take different shape, if, of course, we will get any reversal at all
. Existing here of hidden bullish divergence gives a hint on possible action above previous top. Thus, may be we will get butterfly "Sell" here, and this is advantage for DRPO. Personally I like DRPO's that takes the shape of butterflies on lower time frames.
May be this will be just "222" Sell... Anyway, if we will get no pattern here, it doesn't mean that we should ignore DRPO on daily. Existing of pattern here is just better and brings more confidence to context.
Conclusion:
During last month situaiton on NZD has changed drastically. There some important issues on monthly chart that point on higher potential targets.
At the same time market looks overextended up right now and needs some relief. That's what we will be watching for during next week.
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.
(Reuters) - Gold was little changed on Friday as investors judged that a sell-off sparked by a rise in U.S. interest rates this week had run its course and the dollar weakened, making bullion cheaper for holders of other currencies.
Spot gold was up 0.1 percent at $1,254.24 an ounce by 2:19 p.m. EDT (1819 GMT), having earlier hit $1,251.05, its lowest since May 24. U.S. gold futures settled up 0.2 percent at $1,256.50.
Gold was on track for a second weekly loss and has fallen more than 3 percent from a high of $1,295.97 on June 6 as investors braced for the U.S. Federal Reserve to raise interest rates and signal its policy outlook on Wednesday.
Bullion is sensitive to higher interest rates because they push bond yields higher, increasing the opportunity cost of holding non-yielding gold, and tend to boost the dollar.
"Gold has been spooked by the hawkish tone from the Fed, which triggered some long liquidation both in futures and exchange-traded funds," said Saxo Bank analyst Ole Hansen.
Fears of more rate increases this year were heightened on Thursday by strong U.S. economic data, though housing numbers on Friday disappointed, pushing bond yields and the dollar lower.
"If the Fed were to follow a more aggressive approach, this could preclude any significant rise in gold prices for the rest of the year," Commerzbank analysts wrote in a note.
In other precious metals, silver was 0.2 percent down at $16.68 an ounce after tapping a four-week low at $16.62 and heading for a weekly decline of about 2.6 percent, its biggest in six weeks.
"Price action in both gold and silver of late seems to imply that traders still have plenty of short-term long positioning on their books," said OANDA analyst Jeffrey Halley.
COT Report
CFTC data shows clear bullish sentiment on NZD. Speculative net position has become bullish and open interest shows fast increase. At the same time long position stands far from total saturation. Now it is approximately 1.5K contracts while extreme numbers for NZD stand around 20-30K contracts
So, fundamentals background for NZD we've discussed last week and they haven't changed significantly. Thus, right now let's turn directly to technical setup that we could get here.
Technical
Monthly
Long term picture mostly stands the same and keeps bullish setup for NZD. If you remember our previous bearish context was based on flag breakout. But take a look what we have right now. This is brekout failure, or "bears trap". Price returns back inside the flag. Usually after some time it leads to opposite breakout.
Second - price holds above YPP. It has been tested but now we see confident upside bounce. This action confirms existence of long-term bullish sentiment. Once price was able to hold above YPP, next logical Pivot target is YPR1 at 0.7678 area.
Finally, NZD has formed bullish grabber pattern. It also suggests action above previous tops and mostly confirms possible action to YPR1. Right now price action takes the pause as kiwi has reached long-term support/resistance zone here (yellow line) and it is strongly overbought on lower time frames.
But in general, this long-term chart confirms CFTC data that shows bullish sentiment.
Weekly
Although long term perspective on NZD really looks thrilling, weekly chart shows that market has reached temporal barrier. In fact we have two different channels here. One is long-term, on weekly chart and second one is minor - it is mostly flat and reminds wide flag consolidation.
Thus, right now price has reached it's border and, take a look - weekly overbought. It means that in nearest time price will have some problems to keep the same pace of upward action and chances on retracement significantly increases:
Daily
On daily chart we also see some moments that could point on possible retracement. Here price also has hit overbought and right now NZD is coiling around major 5/8 resistance area. In fact, price is forming DRPO "Sell" pattern here. Despite overall bullish sentiment, DRPO is logical here because kiwi stands overbought on weekly chart and deeper retracement on daily is reasonable. And DRPO precisely leads to deeper retracement compares to B&B trade.
As you can see thrust looks nice, we already have 1st close below 3x3 DMA and close above. As soon as we will get 2nd close below - we will get DRPO "Sell" pattern. Minimal target stands around 50% Fib support of the thrust, i.e. 0.71 area.
4-hour
Here reversal process could take different shape, if, of course, we will get any reversal at all
. Existing here of hidden bullish divergence gives a hint on possible action above previous top. Thus, may be we will get butterfly "Sell" here, and this is advantage for DRPO. Personally I like DRPO's that takes the shape of butterflies on lower time frames.May be this will be just "222" Sell... Anyway, if we will get no pattern here, it doesn't mean that we should ignore DRPO on daily. Existing of pattern here is just better and brings more confidence to context.
Conclusion:
During last month situaiton on NZD has changed drastically. There some important issues on monthly chart that point on higher potential targets.
At the same time market looks overextended up right now and needs some relief. That's what we will be watching for during next week.
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.
