Sive Morten
Special Consultant to the FPA
- Messages
- 18,776
Fundamentals
Last week, guys, we've placed extended research on gold. Last weeks situation has not changed significantly. Now everything is twisting and turning around dollar and its weakness. Recent GDP report was a bit weaker than expected but whole year performance mostly was in a row with expectations. Flat GDP report was a reason again for talks about Fed policy and that it could turn to more dovish steps.
At the same time, US bonds yield continues to rise and in long-term perspective this could hold gold growth. But mostly, among investors 2018 year is treated as potentially positive for gold.
Second potential driving factor for gold is collapse on stock market. VIX now stands at all time lows but last week it has jumped significantly. This is not very visible on long-term chart, but here you can see - any collapse on stop markets is accompanied by volatility growth:
Source: Investing.com
Collapse on stock market could fuel demand for gold as investors will need to protect fixed profit if equities will drop.
Gold could benefit if that scorching run cools, Thomson Reuters GFMS analysts said, predicting volatility in equities and concerns over global politics could lead gold prices up past $1,500 an ounce this year.
As we've talked yesterday in our FX research - markets reaction on GDP release was muted, and it seems that we could get some minor upward action before any retracement will start (if it will start at all, of course).
COT Report
Here we also have the same picture. CFTC data shows definite bullish sentiment, but last week open interest stands flat, while net long position has increased just slightly. Although bullish positions still have room to grow more, but may be this is a sign of temporal pause and, indeed, some bounce will happen...
Technicals
Monthly
Last week technical picture barely has changed as price was coiling around 1330 top. On long-term chart our major setup is still valid. Gold price action looks rather well. COT report also points on bullish sentiment and existence of upside potential as well.
December has become a turning point for gold market. There are two important technical issues have been formed in just one month. They are bullish grabber and reversal candle.
Both patterns mostly have been completed. Last week market slightly has exceeded 1357 tops, but was not able to hold above it yet.
Our major trend line (green) still stands valid. That's why long-term bull trend stands intact. December candle should provide us a lot of patterns for trading on lower time frames, in addition to large patterns that we could get here later.
As our first target has been completed, next one mostly will be 1380-1391 that includes 2016 top, major Fib level and YPR1.
In fact we have a sequence of upside targets. Beyond 1390 area we have 1445, 1500 and 1530 extensions, i.e. targets.
Weekly
Weekly chart has not changed significantly as major targets still stand untouched. Trend is bullish, while overbought should appear only around 1390 area.
In fact weekly chart adds more importance to our 1380-1390 monthly resistance. Here we have two different AB-CD's. First one has 1384 objective point, it is not shown on the chart and second one is 1387 target - red AB-CD. Both targets stand above previous 1380 tops, so multiple stops could be triggered there and gold could reach YPR1 directly, just due impulse move.
Thus, it is logical to expect some brief taking only around 1380-1390 area. Market could show retracement within a week range on daily and intraday charts, but hardly any meaningful bounce will happen here, on weekly until price will not reach our destination point.
Daily
Trend here is bullish s well, price has met overbought area and shown light retracement last week. As a result, harmonic swing down was formed one more time.
Here we have Fib levels tree. On coming week there are just two levels will be particular interesting for us. First is 1343, second - 1330 K-support area. In fact, first level has been reached already. Now it is a question whether market will double harmonic swing down or not.
To be honest, I'm not sure about it. In fact, price reaction on GDP was anemic, and here we have two side-by-side bullish grabbers. They suggest upside continuation and taking out of previous tops. This scenario better corresponds to what we see on weekly chart...
Anyway, if you're thinking about long entry - try to get two major things on our back. Strong support and bullish pattern. If 1343 will be broken, next level where upside action could start is 1330 K-support area.
Intraday
Another reason, why I think that short positions are risky right now is triangle consolidation, that is mostly bullish rather than bearish. In fact, intraday gold has the same picture as EUR.
Drop on Trump's word was impressive, but no continuation has followed on Friday, or better to say it has happened but it was not as strong as it should be, when you're expecting extension swing:
On hourly chart we could get combination of two opposite "222" patterns. First one is upside (yellow) and should become more reliable as it is coincided with daily bullish grabbers and 1343 support area. Next one is bearish and it is more risky to trade it, as it easily could turn to butterfly or, just fail. Thus, it seems that it is better to start with bullish one...
Conclusion
Long term situation has not changed yet. Gold market has extended targets and nothing has happened yet that could make us change our view.
On coming week major concern will be around deeper retracement, whether it will happen or not. Action should start around 1345 and major question is - will any downside action start from 1360 area. If not - gold could start movement to new highs.
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.
Last week, guys, we've placed extended research on gold. Last weeks situation has not changed significantly. Now everything is twisting and turning around dollar and its weakness. Recent GDP report was a bit weaker than expected but whole year performance mostly was in a row with expectations. Flat GDP report was a reason again for talks about Fed policy and that it could turn to more dovish steps.
At the same time, US bonds yield continues to rise and in long-term perspective this could hold gold growth. But mostly, among investors 2018 year is treated as potentially positive for gold.
Second potential driving factor for gold is collapse on stock market. VIX now stands at all time lows but last week it has jumped significantly. This is not very visible on long-term chart, but here you can see - any collapse on stop markets is accompanied by volatility growth:
Source: Investing.com
Collapse on stock market could fuel demand for gold as investors will need to protect fixed profit if equities will drop.
Gold could benefit if that scorching run cools, Thomson Reuters GFMS analysts said, predicting volatility in equities and concerns over global politics could lead gold prices up past $1,500 an ounce this year.
As we've talked yesterday in our FX research - markets reaction on GDP release was muted, and it seems that we could get some minor upward action before any retracement will start (if it will start at all, of course).
COT Report
Here we also have the same picture. CFTC data shows definite bullish sentiment, but last week open interest stands flat, while net long position has increased just slightly. Although bullish positions still have room to grow more, but may be this is a sign of temporal pause and, indeed, some bounce will happen...
Technicals
Monthly
Last week technical picture barely has changed as price was coiling around 1330 top. On long-term chart our major setup is still valid. Gold price action looks rather well. COT report also points on bullish sentiment and existence of upside potential as well.
December has become a turning point for gold market. There are two important technical issues have been formed in just one month. They are bullish grabber and reversal candle.
Both patterns mostly have been completed. Last week market slightly has exceeded 1357 tops, but was not able to hold above it yet.
Our major trend line (green) still stands valid. That's why long-term bull trend stands intact. December candle should provide us a lot of patterns for trading on lower time frames, in addition to large patterns that we could get here later.
As our first target has been completed, next one mostly will be 1380-1391 that includes 2016 top, major Fib level and YPR1.
In fact we have a sequence of upside targets. Beyond 1390 area we have 1445, 1500 and 1530 extensions, i.e. targets.
Weekly
Weekly chart has not changed significantly as major targets still stand untouched. Trend is bullish, while overbought should appear only around 1390 area.
In fact weekly chart adds more importance to our 1380-1390 monthly resistance. Here we have two different AB-CD's. First one has 1384 objective point, it is not shown on the chart and second one is 1387 target - red AB-CD. Both targets stand above previous 1380 tops, so multiple stops could be triggered there and gold could reach YPR1 directly, just due impulse move.
Thus, it is logical to expect some brief taking only around 1380-1390 area. Market could show retracement within a week range on daily and intraday charts, but hardly any meaningful bounce will happen here, on weekly until price will not reach our destination point.
Daily
Trend here is bullish s well, price has met overbought area and shown light retracement last week. As a result, harmonic swing down was formed one more time.
Here we have Fib levels tree. On coming week there are just two levels will be particular interesting for us. First is 1343, second - 1330 K-support area. In fact, first level has been reached already. Now it is a question whether market will double harmonic swing down or not.
To be honest, I'm not sure about it. In fact, price reaction on GDP was anemic, and here we have two side-by-side bullish grabbers. They suggest upside continuation and taking out of previous tops. This scenario better corresponds to what we see on weekly chart...
Anyway, if you're thinking about long entry - try to get two major things on our back. Strong support and bullish pattern. If 1343 will be broken, next level where upside action could start is 1330 K-support area.
Intraday
Another reason, why I think that short positions are risky right now is triangle consolidation, that is mostly bullish rather than bearish. In fact, intraday gold has the same picture as EUR.
Drop on Trump's word was impressive, but no continuation has followed on Friday, or better to say it has happened but it was not as strong as it should be, when you're expecting extension swing:
On hourly chart we could get combination of two opposite "222" patterns. First one is upside (yellow) and should become more reliable as it is coincided with daily bullish grabbers and 1343 support area. Next one is bearish and it is more risky to trade it, as it easily could turn to butterfly or, just fail. Thus, it seems that it is better to start with bullish one...
Conclusion
Long term situation has not changed yet. Gold market has extended targets and nothing has happened yet that could make us change our view.
On coming week major concern will be around deeper retracement, whether it will happen or not. Action should start around 1345 and major question is - will any downside action start from 1360 area. If not - gold could start movement to new highs.
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.
