1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Gold GOLD PRO WEEKLY, February 18 - 22, 2019

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Feb 17, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,838
    Likes Received:
    15,768
    Fundamentals

    Gold enjoys positive background this week, jumped to a two-week high on Friday after weak U.S. economic data boosted expectations the U.S. Federal Reserve would hold pat on monetary tightening, while palladium matched an all-time high on a prolonged deficit.

    “Gold (price action) is like watching oil evaporate. The market is continually bearish at lows and bullish at highs with actual breaks infrequent,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

    “The end of the (Fed) tightening cycle now looms which improves the overall backdrop for gold significantly. With the Fed on hold, there is less pressure for the rest of the globe to keep pace.”

    The metal gained 0.5 percent in the previous session after weak U.S. retail sales data added to disquiet about slowing growth, which could prompt the Fed to hold interest rates steady for a while.

    Lower interest rates reduce the opportunity cost of holding non-interest bearing gold and weigh on the dollar.

    The disappointing U.S. data followed a spate of weak economic reports from China and Europe.

    This helped gold hold its ground amid a rebound in global stocks on hopes of a thaw in the U.S.-China trade dispute.

    “The world economy is slowing very rapidly and therefore monetary policy everywhere will be eased, so the outlook is a lot more inflationary, helping gold,” said Alasdair Macleod, head of research at GoldMoney.com.

    The world’s two biggest economies reached a consensus in principle on key issues during ongoing talks, China’s state news agency Xinhua said. Negotiations will continue next week in Washington.

    COT Report

    At the same time, recent CFTC data shows that market is tired a bit from unstoppable upside action and needs to take pause. Net long position has decreased a bit. This is mostly agrees with our technical analysis, as market is coming to major 1330 daily target. It could become an area where retracement will start.

    upload_2019-2-17_15-23-2.

    In recent 6-8 month, as soon as US initiated tariffs against China, the US-China relationships stands on the first stage. We do not care much on political component, but we're very interested in China economy situation, because it stands as a big part and large contribution to global economy growth. This factor has big influence on gold price.
    Recent data shows that China economy slows, and also new factor appears - China has problem in employment. Here is what Fathom tells in recent report:

    According to Fathom’s China Momentum Indicator (CMI), China’s economy grew by 6.2% in the twelve months to December, up slightly from a downwardly revised and near two-year low of 6.1% in November.
    [​IMG]

    Fathom’s measure of the spare capacity in China’s labour market, the proprietary China Underemployment Indicator (CUI), suggests that around 14% of China’s labour force is underutilised or unemployed, performing roles with relatively little or no economic return. A glaring example of this is the time taken to complete the construction of a residential property in China, which according to Fathom’s proprietary measure is now a staggering seven years, reflecting both the mothballing of properties in the construction phase and a reluctance to declare them as ‘vacant’ even when they are complete.

    The data were more of a mixed bag than in recent months, but the bulk of ‘old-model’ sub-components included within our CMI firmed, in line with our view that China is doubling down.
    A glaring example of China’s reliance on its traditional growth model, as covered in a post several weeks ago, is the time taken to complete the construction of a residential property in China, which according to Fathom’s proprietary measure is now a staggering seven years. This reflects both the mothballing of properties in the construction phase and a reluctance to declare them as ‘vacant’ even when they are complete.

    [​IMG]

    But despite doubling down in a bid to cushion the economy, both labour strikes and internet searches for the phrase “economic recession” are on the up, and are positively correlated. The fact that both are rising indicates that solid growth in aggregate might be masking a lot of churn in the labour market as China’s growth model reorientates.

    [​IMG]

    We know that China keeps silent all domestic problems and very rare information appears in mass media. But, as situation becomes worse, it could blow suddenly. All in all, this factor provides additional support to gold market and tells that it is not only tariffs that drive global financial markets.

    Technical
    Monthly


    Technically, everything stands according to the plan. Gold keeps harmonic picture well by far.

    As we've said earlier, we're watching for our so called "symmetrical" model. As we've identified clear symmetry in market action, we have suggested that future action could be a reflection of previous downside action shape. Last week, market has moved more above the trend line, which was a crucial level for long-term technical picture.

    Gold shows good performance in December- January, which could lay the foundation of new long-term upside trend. We still keep our harmonic technical model on monthly chart as primary tool of analysis.

    Fundamental reasons for gold rising mostly relate to changing of global political and economical situation. Strong global shifts never could happen without big political events. This should provide big support to gold market. Now it is widely suggested that these processes should accelerate closer to 2020 year, or even in second half of 2019. For example, here is report by Fathom Consulting and their expectations to see world crisis around 2020.

    Here is explanation of our "symmetrical" model and scenario. Recent action on gold market reminds reverse H&S shape but very choppy and extended it time. Important COP target has been hit and upside action has started. In fact we have mirror action to the right and to the left from COP point. Market forms approximately equal lows on both sides. The speed is also similar. Is it possible that reversal is forming? Why not.

    On monthly chart we keep watching whether gold will be able to hold above trend line. Now price stands above YPP as well, but it has not been tested yet by price. So,as soon as any meaningful retracement will happen here - YPP could work as nearest destination point. For example, it could happen right after completion of our 1330 target.
    gold_m_18_02_19.

    Weekly

    Since market mostly stands flat in recent few weeks, analysis here is the same.
    Trend stands bullish here, market is not at Overbought, at least on weekly chart. Here we do not need to make many comments. Gold has no fib levels ahead, just XOP target, which is coincides with MPR1 around 1330-1340 area.

    We suggest reaching of this target before any other action, such as retracement that we've mentioned above.
    gold_w_18_02_19.

    Daily

    On daily chart market keeps trading plan as well. As harmonic retracement has been completed - upside action is re-established. Gold also holds above upside trend line. Daily overbought stands above the XOP target, so, no real barriers exist ahead. It's not really big distance to the XOP. As we have Fed minutes on Wed, dovish protocol could help gold to reach the target.
    gold_d_18_02_19.

    Intraday

    Here, on intraday charts, price action with W&R that we've mentioned on Friday, looks like double bottom pattern and its target coincides with daily XOP. We can't use here butterfly shape, just because of the same W&R action, but if we could, 1.27 butterfly could finalize upside action:
    gold_4h_18_02_19.

    Since we suggest that upside action is re-established, pullbacks should be smaller and action faster. Once market will hit XOP around 1323, minor pullback is possible, somewhere to K-support area. Then upside action should continue.
    gold_1h_18_02_19.

    Conclusion:

    Here we repeat the same conclusion - as we're coming to major 1330 target and sentiment analysis shows that gold market a bit tired from unstoppable rally, retracement could be right around the corner.

    In longer term perspective, it seems that all economies that were previously flagman of global grows - have fundamental problems. This should support healthy demand on gold market and brings more confidence to our suggestion that may be we see now new long-term bull trend starting...

    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.
     
    chalo likes this.
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,838
    Likes Received:
    15,768
    Greetings everybody,

    Yesterday gold market was closed, so we still stand focused on the 1330 XOP target. Currently it is not much to do, and some interesting setups should be formed as soon as target will be hit. At least we will get large weekly "222" Sell, and moderate retracment could last for 1-2 weeks...
    gold_d_19_02_19.

    On 4H chart we've correctly estimated starting poing of upside action which also was confirmed by upside breakout of HW pattern - that's our Friday analysis.
    Now the only thing that could use is possible downside retracement and B&B "Buy" pattern in particular. If gold will show retracement before 1330 target will be reached, this could good chance to take scalp long position.
    If no B&B will be formed, then, probably gold will move to 1330 directly and we will get no trading setup.
    Theoretically DRPO "Sell" is also possible, but it is not natural in current situation. So, we XOP just above the market it is could be really tricky situation dealing with DRPO "Sell" if it will be formed. It would be better to skip it.
    gold_4h_19_02_19.

    On 1H chart B&B could take the shape of H&S pattern:

    gold_1h_19_02_19.
     
    chalo and Vokin like this.
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,838
    Likes Received:
    15,768
    Greetings, everybody

    So, as our major XOP target finally has been hit - it seems it should immediately provide a lot of trading setups.
    But, since this target mostly has relation to weekly time frame, reaction will take some time. Often happens that market fluctuates around for some time.

    The one thing that is important right now is daily OB. So it is definitely not the time to go long:
    gold_d_20_02_19.

    On hourly chart we do not have yet something special, no patterns. But on 4H chart we have perfect upside thrust, which potentially is suitable for DiNapoli directional patterns - either DRPO or B&B.

    DRPO "Sell" seems more logical right now, as we at major XOP and reversal pattern is more natural in this situation. But, today we will get Fed minutes release, and fast drop to K-support area could give us B&B "Buy" pattern.
    That is what we watch today. But in perspectives of 1-2 weeks we should get signs of reaction on 1330 target:
    gold_4h_20_02_19.
     
    chalo, fight2live and Vokin like this.
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,838
    Likes Received:
    15,768
    Greetings guys,

    while Gold market is still coiling around the top, let's take a look at other markets. For example, on Cable.
    GBP today has negative background as UK-EU negotiations failed again. Technically GBP hits daily 5/8 Fib resistance at daily OvrBght, which gives us DiNapoli bearish "Stretch" combination and suggests at least technical downside retracement:
    gbp_d_21_02_19.

    On 4H chart we see that the most probable target could be 1.2980 K-support area:
    gbp_4h_21_02_19.

    Price on hourly chart takes the shape of H&S pattern. Thus, we need right arm's top to make a decision on short entry. It would be perfect, if we will get "222" Sell pattern as well. Trade potential is 100 pips, as H&S AB=CD target creates an Agreement with 4H K-support area:
    gbp_1h_21_02_19.
     
    chalo and Vokin like this.
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    11,838
    Likes Received:
    15,768
    Greetings everybody,

    So, finally we have some reaction on major target. Thus right at daily OB we've got perfect Evening star pattern, which suggests downside continuation at least to 1300 area, but I guess that this will be just the beginning of moderate retracement:
    gold_d_22_02_19.

    On 4H chart we have straight downside action. Neither DRPO nor B&B has been formed. Gold easily has broken K-support area. Now price is coming to 5/8 Fib support, which also coincides with daily long-term trend line support. Besides, this is also harmonic swing point, so minor pullback here has good chances to happen.
    Our task is try to use it for short entry, in downside continuation. Currently it is difficult to foresee how strong upside bounce will be. From one point of view - drop is rather fast and bounce should be small, but, from another one - market was standing in long-term rally, upside momentum is strong.
    It means that we need to keep an eye on patterns. Say, we could get B&B "Sell" here around 3/8 Fib level, or 222 Sell around 5/8. Just keep eyes open, watch for patterns.
    gold_4h_22_02_19.
     

Share This Page