Gold GOLD PRO WEEKLY, December 02 - 06, 2019

Sive Morten

Special Consultant to the FPA
Messages
12,709
Fundamentals

As other markets across the board, gold had not too active week as well. There were also not too much events that could drive markets. In fact, it was just some statistics on US that we've discussed yesterday in our FX report and the same US/China trade deal perspective. The last one was mostly discussed by inform agencies and had stronger impact on gold market.

Particular on Friday sentiment on the market has changed drastically as initially it was announced solid progress in negotiations but closer to the end of the session situation has changed.

As Reuters reports - Gold prices gained on Friday as markets awaited further developments on U.S.-China trade talks after Beijing said it would retaliate against Washington for passing a law in support of Hong Kong protesters. However, the metal was on track for its biggest monthly decline since June 2018. China warned on Thursday it would take "firm counter measures" in response to U.S. legislation backing anti-government protesters in Hong Kong.

"(The signing of the bill) takes another step back at the possibility of a trade agreement with China, which really upset them quite a bit. That is why we saw equities come off and gold futures push up," said Phillip Streible, senior commodities strategist at RJO Futures.

Investors have been optimistic about an imminent "phase-one" trade deal between the world's two largest economies, lifting world stocks to record levels and dampening demand for safe haven assets such as bullion. Gold, a hedge during times of financial or political uncertainty, pays no interest or dividends and costs money to
store and insure. However, gold prices were still on track for their best year since 2010, having gained 13.5% so far in 2019. Uncertainties surrounding the long-drawn trade war and recessionary fears have provided support.

"Gold has managed to hold above $1,450 since there is some bargain hunting. This is a good entry level for the ones who missed out previously," said UBS commodity analyst Giovanni Staunovo.

Investors are closely watching U.S. data for signs on the health of the world's largest economy, which could influence the U.S. Federal Reserve in its decision on further monetary easing.

Reduced expectations of further interest rate cuts by the Fed has weighed on spot gold prices, RJO Futures' Streible added. "We could go down to $1,425 by the end of the year."

Currently we could suggest the reasons why negotiations last so long, at least based on information that we have. Recently Reuters reports that China wants U.S. tariffs rolled back in phase one trade deal. But it is unclear how US reacts on this idea.

Beijing is insisting U.S. tariffs must be rolled back as part of any phase one trade deal with Washington, China’s Global Times newspaper said on Sunday citing unnamed sources, amid continued uncertainty on whether the two sides can strike a deal.

“A US pledge to scrap tariffs scheduled for December 15 cannot replace the rollbacks of tariffs,” the newspaper said in a tweet, referring to an additional round of tariffs on Chinese imports to be implemented in the absence of a trade deal.

The Global Times is published by the People’s Daily, the official newspaper of China’s ruling Communist Party.

On Tuesday, U.S. President Donald Trump said Washington was in the “final throes” of a deal aimed at defusing a 16-month trade war with China, a few days after Chinese President Xi Jinping had expressed his desire for a trade agreement. Top trade negotiators for both countries also spoke again and agreed to continue working on the remaining issues.

Trade experts and people close to the White House told Reuters last month, however, that signing of a phase one agreement may not take place until the new year as China pressed for more extensive rollbacks of tariffs. An agreement was initially expected to be completed by the end of November.

U.S. Senate Finance Committee Chairman Chuck Grassley told reporters on Tuesday that Beijing invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin for in-person talks in Beijing.

Grassley said Lighthizer and Mnuchin were willing to go if they saw “a real chance of getting a final agreement”.

A source familiar with the trade talks also told Reuters that U.S. officials could travel to China after Thursday’s Thanksgiving holiday in the United States.

At the same time, we would say that China stands not in conditions when they could have the upper hand on this subject. Recent Chinese data shows that economy is slowing in all spheres, including corporate debt, consumption etc. As longer China stands stubborn as stronger negative effect will be on economy. Besides, D. Trump is impulsive politician, who likes hype around topics that he involved in, no matter what it is - N. Korea nuclear confrontation, China, EU or any other topic. He could change his mind, or just pretend that he has changed his mind in attempt to press on China.

Gold now stands in a bit tricky moment when longer term and shorter term perspective differs. In a longer term view gold looks positive because definitely world economy has global structure problems which demand big reforms, which couldn't be done smoothly and gold could again play its role as major value carrier. It is not necessary to mention political conflicts across the Globe as well.

But in shorter term with inflation stands low and positive US data suggests no rate increase in nearest term. Besides, if US/China Agreement still will be achieved, this could play bad trick with gold which could drop more. In general, our technical view also stands bearish in short-term and agrees with recent fundamental events.

Technical
Monthly


Technical situation is very interesting right now. Short-term price action looks bearish and shows strong downside swings, but all of them are not strong enough to break longer-term picture, which still stands bullish. That's what we've said above on difference between long-term and short-term situation. This is also confirmed by CFTC data. It means that although we've traded gold long first and short then - now is a moment when we have to be delicate and careful with any bearish position. Price comes to the limits and the edge where downside action starts directly confront with longer term bullish context.

On monthly chart situation mostly stands the same and gold keeps bullish context by far. MACD trend stands bullish and price action is forming tight flag consolidation right under resistance area. In general we keep 1530-1585 range as major monthly resistance here.

Butterfly pattern suggests at least 3/8 retracement, which seems solid pullback on lower time frames. It could look scaring but in reality this is normal technical reaction on achievement important target.

That's being said monthly chart keeps long term bullish tendency intact by far.

gold_m_02_12_19.png


Weekly

Weekly trend stands bearish. Although market has shown the reaction on Fib support and weekly Oversold area, that we could call as bullish "Stretch" pattern here, but price wasn't able to climb too high. Recent two weeks shows very tight trading range and minor impact on the chart. They do not give us any clue whether gold intends to show more extended upward reaction or it is turning to downside action again.

Existence of weekly Stretch suggests stronger pullback theoretically, so gold could spend more time inside the bearish flag which is forming here. Besides, in a case of dropping - price hardly will go too far as oversold level has not changed significantly and still stands around 1440 area.

By taking a broader view on situation - we have two support areas. First one is hit already at 1447, next one is K-support area of 1362-1380. K-area is also the target suggested by monthly butterfly pattern. Taking in consideration the momentum, it seems that drop should continue after technical bounce as market stands at weekly oversold and near Fib support level. Fundamental factor also points on this scenario as market widely expects positive result in US/China negotiations. Additionally, recent US statistics was relatively positive.

Now we see that price is not at oversold any more. It means that we should be careful to any bearish signs on lower time frame. Speaking on upside perspective - it totally depends on ability to break 1475 resistance. In this case we could consider action to 1488 area. But now, as drop has happened last week - gold has to start everything from the beginning, as second attempt to reach 1475 has failed last week as well.
gold_w_02_12_19.png


Daily

Daily time frame doesn't provide sufficient clarity on nearest perspective. Once butterfly has been completed - upside action was slow and reached just minimal upside target - 3/8 resistance level. At the same time, drop also was not too strong and recent lows holds. Friday action has erased two bearish grabbers, forming bullish reversal candle, which gives some hope at least on minor upside continuation. Still, we can't talk on new tendency here until gold stands below recent top of 1478 area.
For instance, here we could easily suggest downside butterfly.

Second moment that is not pleasant to the bulls is market reaction on extensions' targets. Our "B" point is OP of our initial AB-CD pattern, and market now stands below it, while recent lows is COP of current AB-CD pattern. Market already stands below both targets and shown no real reversal neither at first OP nor at COP targets. It means that we have to keep in mind OP target where market could tend.

Thus, as you can see overall situation on daily chart stands a bit confusing, partially due solid drop of volatility in recent weeks. It means that we should follow some tactical short-term setups until market will show breakout of some vital level in any direction.

gold_d_02_12_19.png


Intraday

In fact, here we could talk on triangle. Flat triangle right above major support area is not good sign, because it could mean that market has no enough power to bounce up, or sellers' pressure is too strong. As a result market shows consolidation right above support area. Inside the triangle we have "222" Sell pattern around minor 5/8 resistance area. Overall situation doesn't let us to estimate clear direction. Bears could use "222" Sell inside triangle and move stops to breakeven as soon as gold will show minor downside bounce out there.

Bulls, in turn, could wait for this pullback to take long position, expecting upside breakout of the triangle. Alternatively we have conservative approach as well - do nothing and wait for breakout.

gold_4h_02_12_19.png


Personally, guys, I'm not fascinating with the picture that we have and think that overall context is not strong enough to take trades by far. Existing of triangle here makes me tend to bearish scenario more. But this is more the gut feeling than common sense.

Conclusion

Driving factors are transparent right now, the major question when we will get major impact from US/China . As investors anticipate breakout in US/China trading agreement - gold will stay under pressure. Currently we do not see any hazard to long-term bullish tendency, big traders still keep longs on gold. In short-term perspective key to upside scenario is 1475 K-resistance area. While market stands flat, keeping triangle valid and coiling inside - bearish tendency remains on table. It means that although we have some hypothetical setups but they are not strong enough to provide good odds to success.
 

Sive Morten

Special Consultant to the FPA
Messages
12,709
Greetings everybody,

Today we have new inputs on the gold market but they are still too small to clarify situation, at least on the daily chart. Here price still stands above Fib support, forming triangle consolidation. Gold has shown reaction on recent poor ISM numbers, but it was not too significant.

On daily chart we consider possible bearish scenario, if gold somehow will start dropping again.
gold_d_03_12_19.png


On 4H chart, our both setups has worked, despite we've said that it is too few context for trading. As a result - weak context has triggered weak price swings. As drop by "222" Sell was small as upside reaction after ISM release also was small. And today situation mostly stands the same. We could consider only short-term setups here.
First is, we suggest that now it would be better to not take short position because of bullish grabber that we've got yesterday. It means that gold could reach nearest 1470 target and show upside triangle breakout, at least temporary. Upside action could take the shape of butterfly pattern:
gold_4h_03_12_19.png


Anyway, as you can see, situation on gold market is not very interesting. Setups has really small scale due contradiction in short-term fundamental factors. So, today we again meet the same problem - setups are here, but they are too short-term and has weak context again.
 

Sive Morten

Special Consultant to the FPA
Messages
12,709
Greetings everybody,

So, situation on markets changes really fast. Just yesterday we've talked that market is too chaotic and has a lack of context for trading, despite that we've set few upside targets. Our major suggestion was - gold needs strong driving factor, and we talk about 1483 AB=CD target only humbly. And here it is D. Trump with statement - situation has changed in a blink of an eye - gold rallies, stocks collapsed. Impulse that we've talked is here.

Now market has completed AB=CD target and stands near strong daily resistance of K-area and Agreement around 1488-1490. It means that odds suggest at least minor pullback here:
gold_d_04_12_19.png


currently we could suggest two patterns that could trigger retracement - DRPO "Sell" or H&S. In this case, most probable target of the retracement will be 1470 K-support area:
gold_1h_04_12_19.png


Bulls should wait a pullback, bears could watch for pattern and trade it accordingly.
 

JOELIBOK

Private
Messages
22
Hello,

As you remember previously we have longed the market at weekly XOP controlling expansion around 6650 and took profit at 7900. Then we sold the market at the same level for B&B trade. Now it has played out we can close this trade and take the profit also. We will be looking to sell again around 9000.

View attachment 49018
Hi Roger ,This is a great analysis and setup that played out well. I tried DM my email but like there's a problem, here is my email;ibokjoel26@yahoo.com. Send the course details and seminar.
Thanks
 

Ahmed El-Shazly

Private, 1st Class
Messages
43
Hello,

As you remember previously we have longed the market at weekly XOP controlling expansion around 6650 and took profit at 7900. Then we sold the market at the same level for B&B trade. Now it has played out we can close this trade and take the profit also. We will be looking to sell again around 9000.

View attachment 49018
Thank you Roger for the insight, really useful.

one question, I have noticed that you extension is using the second “low” and not the lowest low which is still have an XOP target around 8250 (which is the controlling extension)

thanks
 

RogerTC

Corporal
Messages
97
Thank you Roger for the insight, really useful.

one question, I have noticed that you extension is using the second “low” and not the lowest low which is still have an XOP target around 8250 (which is the controlling extension)

thanks
Hello,

Yes, it is correct. I just didnt show it because i dont think it is strong. (there are stops near to this level and market is coming back from weekly XOP.) So I want to sell at confluence agreement abit higher.

If the market moves above 8250, we will step forward "as you know :) " and 8850 will be the new controlling expansion.

Thanks for the question.

Regards,
 

Ahmed El-Shazly

Private, 1st Class
Messages
43
Hello,

Yes, it is correct. I just didnt show it because i dont think it is strong. (there are stops near to this level and market is coming back from weekly XOP.) So I want to sell at confluence agreement abit higher.

If the market moves above 8250, we will step forward "as you know :) " and 8850 will be the new controlling expansion.

Thanks for the question.

Regards,
Thanks a lot Roger. I always learn a lot from you and Sive’s analysis and view of the market.
 

Sive Morten

Special Consultant to the FPA
Messages
12,709
Please sir sive mortem what is grabbers and B&B
Hi,
This is DiNapoli directional patterns. Grabber is failure trend change by MACD indicator. B&B is a type of momentum trade, when after strong thrust, you take position at Fib level in direction of the thrust. Details you could find in "Trading with DiNapoli levels" book and here, in elder posts.
 
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