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Gold GOLD PRO WEEKLY, January 21 - 25, 2019

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jan 20, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    Last week we do not have any decisive moments for the gold market. Mostly market keeps bullish sentiment and major driving factors are still in place. Current price action on gold market is mostly tactical, without any impact on major tendency yet. Friday drop was due the same factor as on FX market - rumors on easing of mutual US-China tariffs.

    As Reuters reports - Gold slipped on Friday to its lowest in more than a week and headed for its first weekly decline in five, as equities and the U.S. dollar got a lift from investors taking on more risk due to growing hopes for a resolution in the China-U.S. trade war.

    “With the news out yesterday that they expect the U.S. may drop the tariffs on China, we saw a continuation of the move up in equities, and as a result, safe havens such as gold are weaker,” said David Meger, director of metals trading at High Ridge Futures.

    A Wall Street Journal report on Thursday suggested U.S. Treasury Secretary Steve Mnuchin mulled a tariff rollback during trade discussions with Chinese Vice Premier Liu He, scheduled for Jan 30.

    Despite a quick denial by the Treasury, global stocks cruised to their highest in more than a month, while Wall Street got an additional boost from upbeat monthly manufacturing data.

    “Gold did not break through the $1,300 resistance and since there is no catalyst to get us through there, some profit taking has come on as well,” said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.


    The dollar was headed for its first weekly gain in five, unfettered by New York Federal Reserve President John Williams’ stance that the longest government shutdown was taxing the U.S. economy.

    “People also hoped that the dollar index would sell off here but it hasn’t, and that’s another indication why we should take our profits. It has been a good rally,” Pehowich added.

    At the same time, despite sell-off, overall sentiment stands positive. Particularly on Friday, SPDR Fund has added 10 tones in assets and now they stand around 809 tonnes. Now, due to US government shutdown we do not have fresh CFTC data, so SDPR is the only source how we could make a judgement on sentiment on the market:

    upload_2019-1-20_12-15-6.

    Technical
    Monthly


    Market still has turned to retracement. In the beginning of the week, it was keeping intrigue on possible upside breakout, but as rumors on US-China tax easing have appeared, market dropped. Still, there is nothing wrong with it, because, if you remember, initially we've waited for this retracement. And we should treat upside breakout as more unexpected event rather than retracement.

    As it is not much time till the end of the January - we should keep an eye on possible bearish grabber. All other things stands mostly the same.

    Gold shows good performance in December, 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.

    Recent 4 months gold shows tight trading range. Now gold stands in the center of impact of different short-term and long-term factors. Long-term factors mostly are political and suggest changing of global political situation, breaking of Pax Americana global model. Avoiding too much talking on this subject we would say that so 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. For example, here is report by Fathom Consulting and their expectations to see world crisis around 2020.

    In shorter-term perspective situation is unstable and subject to change. Just few weeks ago everybody thought that it is one more year of active Fed policy, so rate could be 3+% by the end of Fed cycle. Now situation has changed. Some factors appears, some changes and some are gone to passed. All these stuff put the shadow on gold price behavior. Inflation expectations have dropped significantly as in US as in EU now. If Fed will hold rate hike and stock market will keep head above the water - gold market remains under pressure. No interest rate cut and stock market collapse should provide support to gold.

    As a result, targets on gold market vary. We keep our specific picture, sometimes it is useful to search for harmony on the market. And we could find it, if we look carefully. In fact, 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. Now take a look we have trend line that was broken down here. If market will return back above it - this will be important bullish sign. Conversely, a kind of goodbye kiss will tell that price will drop further. Downside targets also different - from nearest weekly 1113 OP till 890$ of extended butterfly that we've mentioned last week.

    Now market has reached this trend line and flirts with it. Within few weeks we probably should get more clarity, depending on whether gold will be able to hold above the trend line or not.

    gold_m_21_01_19.

    Weekly

    Last week was inside one and makes no impact on weekly chart. Standing in tight range confirms the strength of resistance and the fact that market carries its impact. In fact, after few challenges of this level, gold has failed to break it and now starts to show action that we initially expected to see. So we keep our commentaries on weekly chart mostly the same - a lot of bullish signs confirm positive sentiment, but strong resistance where market stands right now suggests tactical pullback.

    As we've said previously and in our daily updates - market shows a lot of bullish signs. For instance, here, on weekly, we have upside acceleration of CD leg and moving above as OP target as major 5/8 Fib resistance. In fact, market almost has tested 1300 area.

    Acceleration right to OP target is not typical for reversal and for retracement action. Despite that we have here clear AB-CD action and "222" it is not good moment for taking short position. Chances on re-establishing downside action to 1113 target stands low right now.

    Still, despite that overall performance impressive, gold is coiling around solid resistance area - weekly Agreement, MPR1 and near weekly OB. Anyway for new long position we need a retracement, and it seems that it still has good chances to happen within 1-2 weeks.
    gold_w_21_01_19.

    Daily

    This chart doesn't need a lot of comments. Our pennant pattern has been broken in opposite direction. Trend has turned bearish, so bears take tactical control over the market on coming week. Retracement still has started. It means that bulls should sit on the hands and wait when gold will reach support area, form some bullish continuation pattern.

    Daily picture shows that market hardly will drop below 1260 next week. This is Fib support, daily Oversold and MPP area.
    gold_d_21_01_19.

    Intraday

    Despite that market has broken our triangle consolidation and preparation for upside breakout was broken by USD supportive rumors on the market, gold still stands above recent lows of "B" point in a kind of rectangle.

    Inside rectangle we have AB-CD setup, with OP just under the lows of "B" point. XOP, by the way, coincides with daily Fib support and creates an Agreement.

    Also, until "B" point stands intact - gold still keeps chances on upside butterfly...

    Although downside deeper retracement is very probable, we should observe precautions. Thus, if you plan to go short - it is better to do it inside the rectangle and do not use stop entry orders below it, because of OP. OP could initiate fake breakout, a kind of W&R of previous lows. This is also WPS1, by the way.
    Second - only if market will stay under 1275 it is possible to search chances for position taking with 1260 target. Finally, do not marry any position and use near standing targets. Rumors is very tricky thing the could change 180 degrees tomorrow. Politicians use verbal interventions very often and are not stuck for a response.
    gold_4h_21_01_19.

    Conclusion:

    Long term sentiment still looks good for gold market. At the same time, while gold stands at strong weekly resistance, pause in uptrend could last a bit longer. So, next week we probably finally will deal with retracement.


    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.
     
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  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, we continue to deal with our setup, that we've discussed in our weekly report. Market slowly but stubbornly moves down. Actually it moves slowly due yesterday MLK holiday in US. Since this is mostly weekly setup, chances are high for deeper drop within few weeks. But right now we're mostly interested in short-term setup - what will happen around first 1273 Fib support area. This is good scenario for scalp long trade.
    gold_d_22_01_19.

    As we've said - if you have bearish view, you need to take short position inside the rectangle. Now it is not good situation for taking shorts. Here is big chances for possible W&R of 1275 area. OP target stands right under the lows and creates an Agreement with Fib support level. After stop grabbing action market could return back inside the rectangle, forming fake breakout.
    gold_4h_22_01_19.

    W&R could be triggered by 1H butterfly pattern. More probable that it will be 1.618 target, as stops below 1275 should push gold slightly lower.
    gold_1h_22_01_19.

    That's being said, if you're watching for scalp long trade, this is the story that you could think about. It includes some advanced analysis, and not very obvious. So, chances it could work are not bad.

    For bears - it would be better to wait definite breakout of 1270 area and take position on retracement later. Using stop entry order right now around 1273 is also not safe, as you understand.
     
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    Today we take a look at GBP instead of gold, as gold shows no progress since our yesterday's talks. As we've mentioned previously GBP stands in kind of emotional and technical relief after big negative pressure of endless Brexit discussion and voting. It means that market could show a bit deeper retracement. It cares no fundamental changes, but mostly technical one.
    Thus, on weekly chart I wouldn't exclude upside bounce to major 3/8 Fib level and OB level around 1.33:
    gbp_w_23_01_19.

    Last week market was at resistance - daily OB, trendline and COP target. So we've suggested downside pullback which is completed right now and price turns back to trend line. Upside breakout should lead us to completion of OP target, which is also Double Bottom one.
    gbp_d_23_01_19.
    Failure of breakout doesn't mean that upside action will not happen, because market could form, say, "222" Buy with AB-CD action back to K-support area. But it tells that we do not get it this week.
    So, one of the ways how long position could be taken here is to place stop entry order above recent top and daily trend line.
    gbp_4h_23_01_19.
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, gold market stands in tight range by far and some changes are visible only on intraday charts. On daily, once market has broken pennant down - it increases chances on deeper downside retracement. This week we're watching for 1273 Fib support:
    gold_d_24_01_19.

    Yesterday, after touching of the lower border of rectangle market has made an attempt to move higher. But these attempts always looks suspicious when market has untouched major extention target. So, this upside action could become a trap for those who trades in flat and buys at rectangle support. Market has failed to move in upper half of rectangle and starts dropping again.
    Second trap stands for breakout traders who use stop entry orders below rectangle's border. As we have 1273 Agreement support, there is big chances for W&R action around it. So, I would suggest taking long position in case of downside breakout by this reason:
    gold_4h_24_01_19.

    The pattern that could trigger upside action is butterfly "Buy" on 1H chart:
    gold_1h_24_01_19.
     
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    Today guys is just fast update on GBP. Mostly GBP has reached predefined target as it hits our daily 3/8 Fib resistance and OB area. In fact this action has happened because the Sun reported that Northern Ireland’s Democratic Unionist Party has privately decided to offer conditional backing for Prime Minister Theresa May’s Brexit deal next week.
    gbp_d_25_01_19.

    Still, maybe market will try to complete our OP target at 1.3185 today. It stands just 20 pips above Fib resitsance. Since GBP is rather volatile currency, I do not see that it is absolutely impossible.
    gbp_4h_25_01_19.
     
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