Sive Morten
Special Consultant to the FPA
- Messages
- 18,732
Fundamentals
Gold was heading for a 1.8 percent weekly fall on Friday, dented by hopes that diplomatic efforts can calm violence in Ukraine and by strengthening U.S. economic data. Fears over slowing demand in top consumer China and sustained sales from gold-backed funds also contributed to its fall below $1,300 an ounce. There will be no London gold fixing - the twice-daily price-setting benchmark - on Friday and Monday because the UK is on holiday. The U.S. market will be closed on Friday.
"The price of gold dropped this week ... as further evidence emerged of an improvement in the U.S. economy," Natixis analyst Bernard Dahdah said. "As the U.S. economy 'normalises', so debate at the Fed is clearly mounting over how and when to renormalise interest rates," he added. "If further strengthening of U.S. economic data were to raise expectations of a renormalisation of interest rates, gold prices would once more come under pressure." Earlier this week the Federal Reserve Chair Janet Yellen reiterated an accommodative monetary policy stance. Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, have been an important factor driving gold higher. But Yellen's remarks were offset by U.S. economic data pointing to activity picking up after disruptions due to harsh winter weather.
Gold's main prop over the past few sessions has been its role as an insurance against the market risks raised by escalating tensions between Russia and the West over Ukraine. But these eased somewhat on Thursday after the United States, Russia, Ukraine and the European Union called for an immediate halt to violence. Implying underlying investor bearishness and pessimism over the longer-term outlook, holdings in the world's biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on Wednesday, the biggest daily outflow since late December.
PLATINUM DOWN ON POSSIBLE END TO S.AFRICAN STRIKE
Platinum was unchanged at $1,404.50 an ounce, having posted its biggest daily loss since January, down 1.9 percent, in the previous session after South Africa's biggest platinum producers offered to raise wages for miners in a bid to end a 13-week-old strike. Anglo American Platinum Ltd and Impala Platinum Holdings Ltd said they proposed a settlement to end South Africa's longest and most damaging mining strike in living memory.
Among other precious metals, silver was down 0.1 percent at $19.58 an ounce and palladium was unchanged at $794.00 an ounce.
Monthly
Situation on monthly gold is very tricky. In fact, guys, we will have to separate our trading plan for short-term charts and long-term ones. The point is short-term gold lives on its own life, if we can say that, and forms it’s own short term patterns that hardly impact on big picture. While long-term gold now shows time bomb and you do not know whether it will explode or not. I’m speaking about bearish grabber here. This pattern is so important right now, because it could turn upside down situation on long-term gold. Thus, our approach will be based on simple rule. Until lower time frames patterns will not contradict with higher time frame setups we will trade them as usual. Otherwise we will skip them.
Taking into consideration all issues that we have now on gold market – I would not rush with reversal conclusions and treat current move down as retracement by far. Especially taking into consideration recent tensions in Ukraine again. Yes, we have bearish grabber and it has appeared right at Yearly Pivot Point – this is not best combination to have on your back when previously you thought above upward action. Grabber potentially strong pattern that could lead price back to 1180 lows again, but grabbers do not work every time. Also I’m concerned on recent upward action - market has not reached neckline of potential Double Bottom pattern and has not reached AB=CD upward target around 1430. The question what will it be – another gold’s trick and pitfall? Or, we will get some triangle instead of Double Bottom? Difficult to say by far.
But we can say one thing. If gold is really bullish, and it stands above 0.618 target already – there is no reasons for too extended retracement to downside.
Long term upside target stands around yearly PR1. We know that gold likes to re-test previously broken lows and consolidations. 1540 area is monthly overbought, YPR1 and low border of broken long-term rectangle. As market was strongly oversold, very often it has tendency to reach overbought. Market is an impulse substance and reaction equals to counter reacion.
That’s being said – nearest target here is 1430 resistance level. In nearest future we have to keep close eye on current retracement down. Appearing of bearish grabber will force us to postpone upward expectations until it will not be resolved – either hits target or will be vanished. It means that currently is not perfect moment for taking any long-term position and better to focus on lower time frames until situation on monthly will not be resolved. Fortunately, our trading setups stand inside of grabber’s swing.
Weekly
Previous week has given us big black candle that does not look like desirable continuation of B&B trade. At the same time, may be it will sound curious, but this recent plunge has advantages as well. Our invalidation point here is low around 1275. As market already has started move up and even shown upward action within 2 weeks – it should not return right back down and take out 1275 lows. This will not stand in a row with B&B. From this point of view recent move down is warning sign.
Still, market has held above 1275 lows and advantage stands with possibility of taking position with very small risk. If even we will become wrong – loss will be minimal.
And finally, may be this thought a kind of science fiction but chances exist on appearing of butterfly “Sell” here as well. Recent 5 candles could be treated as left wing. Market right now still stands inside of swing down and at least theoretically could form right wing.
But of cause, our major focus on coming week will stand on current 1275 lows.
Daily
Daily situation we mostly have described in daily videos. Major moment here, except the same 1275 lows is MACD Predictor line. Price stands very close to it right now and if any bullish grabber will appear – this moment could significantly clarify overall picture. Recent trading sessions were very calm and price has formed 2 side-by-side inside trading sessions, that suggests either indecision or just long holiday’s preparation. As we’ve noted on Friday – we’ve suggested some more downward action inside of long miserable black candle and now, on Monday we will be watching for price action around 1285 area – whether it will form any bullish reversal patterns, accompanied with grabber or not. Because to take long position blindly here is very dangerous journey, especially having on the back such plunge as we have on previous week.
4-hour
Here I’ve drawn possible AB=CD that we could get, if price will form, say, grabber, or any other pattern that could become a reason for upward action. Most recent candles shows bearish grabbers, that suggest some more downward action. That is not a tragedy and looks reasonable, taking in consideration the strength of recent drop and it’s momentum.
1-hour
Here we see that price stands inside the range of last candle of the drop. When solid candle has been formed - it very often holds all following price action for some period. Recently we’ve drawn a butterfly here, but this is not neccesary to treat it precisely in this manner. Actually we have solid drop on Wednesday and has some momentum that still presses on market and could lead to some shy downward continuation. From that purpose we need to watch for 1290 and 1285 areas – 1.27 and 1.618 extensions and support levels of retracement up.
Conclusion:
Since gold market stands in strong geopolitical and fundamental storm – price is flirting with very significant crucial level of YPP that potentially could lead to appearing of drastical moments. For example, bearish stop grabber could drastically shift force balance. That’s why it is better to avoid taking any long-term position on gold right now.
Our medium-term trading plan suggests taking long position. Our reason for this is potential B&B “Buy” on weekly chart that could lead market as far as 1350 area. This pattern does not contradict monthly grabber, since 1350 target stands inside of its swing and after 2 weeks of action looks perfect by far. Although on previous week market has shown unwelcome plunge down but it has not destroyed B&B setup and price holds above invalidation point.
In the beginning of the week we need to get clarification of what to expect from B&B – either it will be vanished, or we will get upward AB=CD action. We will be able to do this by watching on two moments. First is downward action to 1290 and 1285 area and in general, whether market will hold above current lows. Second – monitor appearing of bullish stop grabber by the end of the day, since it could give necessary clarification and huge relief for those who count on upward action.
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.
Gold was heading for a 1.8 percent weekly fall on Friday, dented by hopes that diplomatic efforts can calm violence in Ukraine and by strengthening U.S. economic data. Fears over slowing demand in top consumer China and sustained sales from gold-backed funds also contributed to its fall below $1,300 an ounce. There will be no London gold fixing - the twice-daily price-setting benchmark - on Friday and Monday because the UK is on holiday. The U.S. market will be closed on Friday.
"The price of gold dropped this week ... as further evidence emerged of an improvement in the U.S. economy," Natixis analyst Bernard Dahdah said. "As the U.S. economy 'normalises', so debate at the Fed is clearly mounting over how and when to renormalise interest rates," he added. "If further strengthening of U.S. economic data were to raise expectations of a renormalisation of interest rates, gold prices would once more come under pressure." Earlier this week the Federal Reserve Chair Janet Yellen reiterated an accommodative monetary policy stance. Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, have been an important factor driving gold higher. But Yellen's remarks were offset by U.S. economic data pointing to activity picking up after disruptions due to harsh winter weather.
Gold's main prop over the past few sessions has been its role as an insurance against the market risks raised by escalating tensions between Russia and the West over Ukraine. But these eased somewhat on Thursday after the United States, Russia, Ukraine and the European Union called for an immediate halt to violence. Implying underlying investor bearishness and pessimism over the longer-term outlook, holdings in the world's biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on Wednesday, the biggest daily outflow since late December.
PLATINUM DOWN ON POSSIBLE END TO S.AFRICAN STRIKE
Platinum was unchanged at $1,404.50 an ounce, having posted its biggest daily loss since January, down 1.9 percent, in the previous session after South Africa's biggest platinum producers offered to raise wages for miners in a bid to end a 13-week-old strike. Anglo American Platinum Ltd and Impala Platinum Holdings Ltd said they proposed a settlement to end South Africa's longest and most damaging mining strike in living memory.
Among other precious metals, silver was down 0.1 percent at $19.58 an ounce and palladium was unchanged at $794.00 an ounce.
Monthly
Situation on monthly gold is very tricky. In fact, guys, we will have to separate our trading plan for short-term charts and long-term ones. The point is short-term gold lives on its own life, if we can say that, and forms it’s own short term patterns that hardly impact on big picture. While long-term gold now shows time bomb and you do not know whether it will explode or not. I’m speaking about bearish grabber here. This pattern is so important right now, because it could turn upside down situation on long-term gold. Thus, our approach will be based on simple rule. Until lower time frames patterns will not contradict with higher time frame setups we will trade them as usual. Otherwise we will skip them.
Taking into consideration all issues that we have now on gold market – I would not rush with reversal conclusions and treat current move down as retracement by far. Especially taking into consideration recent tensions in Ukraine again. Yes, we have bearish grabber and it has appeared right at Yearly Pivot Point – this is not best combination to have on your back when previously you thought above upward action. Grabber potentially strong pattern that could lead price back to 1180 lows again, but grabbers do not work every time. Also I’m concerned on recent upward action - market has not reached neckline of potential Double Bottom pattern and has not reached AB=CD upward target around 1430. The question what will it be – another gold’s trick and pitfall? Or, we will get some triangle instead of Double Bottom? Difficult to say by far.
But we can say one thing. If gold is really bullish, and it stands above 0.618 target already – there is no reasons for too extended retracement to downside.
Long term upside target stands around yearly PR1. We know that gold likes to re-test previously broken lows and consolidations. 1540 area is monthly overbought, YPR1 and low border of broken long-term rectangle. As market was strongly oversold, very often it has tendency to reach overbought. Market is an impulse substance and reaction equals to counter reacion.
That’s being said – nearest target here is 1430 resistance level. In nearest future we have to keep close eye on current retracement down. Appearing of bearish grabber will force us to postpone upward expectations until it will not be resolved – either hits target or will be vanished. It means that currently is not perfect moment for taking any long-term position and better to focus on lower time frames until situation on monthly will not be resolved. Fortunately, our trading setups stand inside of grabber’s swing.
Weekly
Previous week has given us big black candle that does not look like desirable continuation of B&B trade. At the same time, may be it will sound curious, but this recent plunge has advantages as well. Our invalidation point here is low around 1275. As market already has started move up and even shown upward action within 2 weeks – it should not return right back down and take out 1275 lows. This will not stand in a row with B&B. From this point of view recent move down is warning sign.
Still, market has held above 1275 lows and advantage stands with possibility of taking position with very small risk. If even we will become wrong – loss will be minimal.
And finally, may be this thought a kind of science fiction but chances exist on appearing of butterfly “Sell” here as well. Recent 5 candles could be treated as left wing. Market right now still stands inside of swing down and at least theoretically could form right wing.
But of cause, our major focus on coming week will stand on current 1275 lows.
Daily
Daily situation we mostly have described in daily videos. Major moment here, except the same 1275 lows is MACD Predictor line. Price stands very close to it right now and if any bullish grabber will appear – this moment could significantly clarify overall picture. Recent trading sessions were very calm and price has formed 2 side-by-side inside trading sessions, that suggests either indecision or just long holiday’s preparation. As we’ve noted on Friday – we’ve suggested some more downward action inside of long miserable black candle and now, on Monday we will be watching for price action around 1285 area – whether it will form any bullish reversal patterns, accompanied with grabber or not. Because to take long position blindly here is very dangerous journey, especially having on the back such plunge as we have on previous week.
4-hour
Here I’ve drawn possible AB=CD that we could get, if price will form, say, grabber, or any other pattern that could become a reason for upward action. Most recent candles shows bearish grabbers, that suggest some more downward action. That is not a tragedy and looks reasonable, taking in consideration the strength of recent drop and it’s momentum.
1-hour
Here we see that price stands inside the range of last candle of the drop. When solid candle has been formed - it very often holds all following price action for some period. Recently we’ve drawn a butterfly here, but this is not neccesary to treat it precisely in this manner. Actually we have solid drop on Wednesday and has some momentum that still presses on market and could lead to some shy downward continuation. From that purpose we need to watch for 1290 and 1285 areas – 1.27 and 1.618 extensions and support levels of retracement up.
Conclusion:
Since gold market stands in strong geopolitical and fundamental storm – price is flirting with very significant crucial level of YPP that potentially could lead to appearing of drastical moments. For example, bearish stop grabber could drastically shift force balance. That’s why it is better to avoid taking any long-term position on gold right now.
Our medium-term trading plan suggests taking long position. Our reason for this is potential B&B “Buy” on weekly chart that could lead market as far as 1350 area. This pattern does not contradict monthly grabber, since 1350 target stands inside of its swing and after 2 weeks of action looks perfect by far. Although on previous week market has shown unwelcome plunge down but it has not destroyed B&B setup and price holds above invalidation point.
In the beginning of the week we need to get clarification of what to expect from B&B – either it will be vanished, or we will get upward AB=CD action. We will be able to do this by watching on two moments. First is downward action to 1290 and 1285 area and in general, whether market will hold above current lows. Second – monitor appearing of bullish stop grabber by the end of the day, since it could give necessary clarification and huge relief for those who count on upward action.
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.
