GOLD PRO WEEKLY, August 20-24, 2018

Sive Morten

Special Consultant to the FPA
Messages
18,564
Fundamentals

Fundamental background barely has changed for gold last week. Mostly it remains negative, despite recent relief. As Reuters reports - Gold recovered some ground on Friday as a weakening U.S. dollar relieved pressure on prices, but the precious metal remained near 19-month lows and looked poised for its biggest weekly drop since May 2017.

As we've mentioned in our FX research for this week - current pause in dollar appreciation is mostly technical, and stands due over-extension of US dollar, so markets right now are mostly oversold, while dollar is overbought:

“The markets are very oversold and the dollar is overbought,” said John Caruso of RJO Futures. “It looks like some of the shorts are trying to book some profits.”

From a 13-month high on Wednesday against a basket of six major currencies, the dollar has weakened against the currencies of key gold markets, the euro zone and China, helping gold regain its footing, said ABN AMRO analyst Georgette Boele.

“I expect the dollar to peak in the coming weeks ... Gold should bottom out here,” she said.

Investors seeking a safe place to store assets amid trade disputes and a Turkish currency crisis have preferred the dollar to gold, undermining the reputation of bullion as a safe haven.

But news of planned U.S.-China trade talks and a partial recovery of Turkey’s lira have steadied investors’ nerves slightly.

Bets on lower prices on the Comex exchange continue to build and now outweigh bets on higher prices by the largest quantity ever recorded.

Although there is an opinion that pressure from speculators may ease, fundamental background doesn't show any supportive signs to this idea. The problem is gold hasn't have net bearish position within last decade and it has no definitely known lows that could be used as ultimate level. That's why we have yet to see what bottom will be hit. This gives additional risk on position holding. The one thing that still could be used is a gold mining breakeven price, which now stands around 800-900$ per Oz on average. As we've explained in our technical analysis - it will depend on 1100 lows. If gold will break it - levels below 1000$ will become a reality and 800 is one of them.

In technicals, Fibonacci resistance was at $1,185.30 with support at the January 2017 low of $1,146.20, analysts at ScotiaMocatta said, adding that gold would likely fall further.

COT Report

Recent CFTC data shows precisely what we've said - net short position is growing 3rd week in a row and is backed by growing open interest as well. Thus, statement above that "everybody is short already" hardly is true. Besides, largest gold ETF - SPDR fund has lost another 10 tonnes of its stores just for one week. This is above average speed of wash out of stores.
upload_2018-8-19_15-5-40.png



Here is the data - take a look at strong increase of speculators ( non-commercial) short-positions for 21K contracts and growing of open interest for 56K. Hedgers (commercial) also have increased longs for the same amount, which is typical action for bearish trend.

upload_2018-8-19_15-11-55.png



Technical
Monthly


Market stands in upside retracement right now that's why monthly/weekly time frames barely have changed.
Previously we already explain major points of our view on gold market and explained why we worry on acceleration of bearish performance here.

Slowly but stubbornly gold market moves lower and result of this move could be seen even on monthly chart. The crucial, decisive bearish moment happens not now, it has happened at the end of 2017.

Long-term trend line has been broken in July and as we've said last time - "If this line will be broken - gold could start dropping with acceleration."

Fundamental irrational behavior which we've disclosed earlier now starts to show continuation. Recall our conclusion that we've made since the beginning of the year. That was decisive moment that we've mentioned:

"most important moment for long-term gold right now is ability to move higher. 1327 level is long-term COP target of AB-CD started at 1046$, in July 2015. First it was reached in July 2017. After logical minor bounce price returns back to it. But right now it should be an action higher, to next 1450 target, which is OP of the same AB-CD.
If gold will not be able to do it - strong drop is possible, because price will fail to proceed next extension leg, showing inability and lack of strength to do it. This could break whole AB-CD construction. Besides, this standing below "B" point also keep door open for downside butterfly. As longer gold will stand under resistance as weaker it position will be."


Now take a look at price action that we have. Market has failed to break 1360 top, which means that it has failed to proceed to OP target. Which, in turn, means breaking of CD leg. This process has not finished yet, but signs that we see right now makes us worry.

Besides, we have W&R of 1360 COP top, which also has bearish sentiment.

Our hopes to get bulilsh grabber on May were vanished as price has closed below MACDP line. Trend now stands bearish here.

That's being said, on long-term chart gold looks heavy and weak and overall picture is not attractive for taking long-term bullish position. The fact that gold disrespect 1215 major support and Agreement area, but proceeds directly to YPS1 - just proves the weakness. YPS1 is quite important for any market. Breaking of this level will let us to treat gold action as new bear trend, and previous upside action to 1380 as just a retracement. Next target here, on monthly is 1120 lows, but first is - reaction of the market on YPS1:
gold_m_20_08_18.png


Weekly

Weekly time frame is the one that gives us the vision for few weeks. In a longer-term view we still have large AB=CD pattern with OP around 1113 area. Sooner or later but probably it should be reached. Just because gold has dropped easily through 1215 major support and has not stopped at 1180 YPS1 but collapsed right to 1160. So, now price action stands between COP and OP target. Usually in such placement, price gravitates to OP, because in fact, it has no strong support lower, its a free space. And the only thing that keeps gold from disaster is Oversold condition, which important for us in short-term view.

Oversold suggests upside bounce at least to 3/8 resistance area - 1238$. It looks far on weekly chart, but in reality, this is just 30% and common response to reaching of OS. Since our major direction is down - we're mostly looking for chances to go short here, and upside bounce to Fib level could give us B&B "Sell". That's particular the pattern that we will be watching for here:
gold_w_20_08_18.png


Daily

As on EUR as here - we do not have something special yet, as gold just has turned up. A few additional details though. First, is 1238 is previous lows also, which provides natural resistance as well. Market is not at overbought and easily could proceed upside action. First more or less valuable resistance here is 1217 area:

gold_d_20_08_18.png


Intraday

So, our Friday suggestion on upside continuation was correct, guys. Thus, we can't classify 4H setup as B&B "Sell" one, just because it doesn't match to DiNapoli conditions. Still bearish momentum trade setup sooner or later should be formed, because it was outstanding collapse on gold market. But, probably chance for scalp short trade will appear a bit higher.

Personally I think, that we could watch for this kind setup - "222" Sell. It is difficult a bit to say definitely where upside action could stop, but taking in consideration Friday's acceleration, chances on reaching OP are not bad. Besides, this will be Agreement with 1195 Fib resistance:
gold_1h_20_08_18.png


Conclusion

If no geopolitical surprises or natural disaster will happen - gold will remain under pressure in foreseeable future. Currently is very difficult to see some fundamental factor that could support gold.

Now we have two technical setups. We wait chance to go short around 1138 area on weekly chart. At the same time we will take some scalp trades on intraday charts, which could be of different direction.


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 market testing though quarterly macd predictor so we need to monitor till the end of quarter to see if we get confirmed sell or a stop grabber buy. There are stops above 1377 level so if get a stop grabber buy we can see big rally on gold market. I m bullish on bitcoin and gold on the long term so focused on bullish scenarios.

Gold Quaterly.PNG

Looking at our monthly; market pushing through COP agreement zone around 1209-1215. What is more interesting is we have demark s COMBO setups both on weekly and daily timeframes. İf we close the monthly back above this support that can be a clue for quarterly stop grabber.

XAUUSDMonthly.png

GOLDWeeklycombo.png

GOLDDailycombo.png


BTW If we go down to 1hr timeframe we can see the railroad track type action togerher with demark signals. So lets see unless we get this scenario gold market is bearish.
 
Greetings everybody,

As we've said in weekly report, despite long-term bearish view on gold, in shorter-term we're watching for reasonable upside bounce, just because Gold stands at strong support and daily/weekly OS area. Our expectation is 1238 at least.

At the same time, since market was standing in downward action for long time - strong bearish momentum is still on the market, and it should trigger meaningful retracement down sooner rather than later:
gold_d_21_08_18.png


On 4H chart gold has completed our setup - "222" Sell pattern right now stands in place and this is potential situation for starting point of this retracement:
gold_4h_21_08_18.png

Daily traders need this retracement to go long, with our daily/weekly scenario and 1238 target, while scalp traders could watch it for scalp short trading.

But, one more thing we should get before trying to go short. We need clear bearish reversal pattern on hourly chart. Now we do not have it yet. If we will get any - it should be relatively safe to go short here. If nothing bearish will be formed and market just will break this channel up - we will watch for next level. This is XOP target around 1207:
gold_1h_21_08_18.png
 
Good morning,

Daily picture on Gold market mostly stands the same. Our medium term scenario is bullish and we suggest upside bounce somewhere to 1240-1250 area within few weeks:
gold_d_22_08_18.png


Meantime, within few sessions, chances on pullback are not bad. Yesterday we already have mentioned "222" Sell pattern at 1195 Agreement resistance. So, it could become a good background to trigger retracement down:
gold_4h_22_08_18.png


Our major context is bullish, thus, for us this retracement is needed to provide better long entry point. Trading it short cares significant risk - just watch today's EUR video. Still, if you want to do this - wait for clear bearish reversal patterns on 1H chart. Now we have just bearish MACD divergence and trend line "kiss goodbye" action.
Potentially retracement should reach either 1185 K-area or 1175 major 5/8 Fib level. K-area is also precise number of YPS1:
gold_1h_22_08_18.png
 
Greetings everybody,

So, it seems that everything stands good. Once patterns have been formed - gold is starting downside retracement. We will try to use it for long entry. In general gold shows very similar setup to EUR:
gold_d_23_08_18.png


4H chart shows that our "222" Starts to work:
gold_4h_23_08_18.png


Most important chart for short-term analysis is 1H. Currently we could only approximately estimate potential targets of retracement. Now we could recognize potential H&S pattern and it points on two targets. Both of them coincide with major Fib levels here. AB=CD target creates Agreement with K-support, while XOP coincides with 1175 5/8 area. Now we need to wait for speed of downside action and how market will response to these levels. I would suggest that K-area has more chances to stop retracement down, if it will not be too strong, we'll see...:

gold_1h_23_08_18.png
 
Morning guys,

Just few words on gold situation. Although it mostly stands the same, but now one comment should be given to hourly chart.

On 4H - gold has hit minimum target of "222" Sell pattern as price hit 3/8 major support area. Thus, now it is treated as "completed", but it doesn't mean that market can't go lower.
gold_4h_24_08_18.png


On hourly chart gold has reached our K-support area, and here we have concern - upside action that we see right now - is it reversal or not yet? I would suggest that it is not. Mostly because of price behavior. It is too gradual and slow and doesn't correspond match to reversal action, when major trend starts to work again.

It makes me think, that here, on gold market we have good chances to get larger AB=CD pattern and retracement back to 1175 major 5/8 Fib support:
gold_1h_24_08_18.png


Also, this 1H chart is a good example, why we want to have strong support area on your back, when thinkging about long entry. If even you've taken long position here, at 1185 - you're in profit and could move stops to breakeven. It is not vital for your account wether you will be right or wrong. This is the feature of strong levels. That's why we call every time to get as much as you can on your back - patterns, levels etc.
 
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