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GOLD PRO WEEKLY, July 09 - 13, 2018

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jul 8, 2018.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    It seems that bad times are started for gold market. The total anticipation of global policy shift in direction of interest rates increasing presses on market. Even on Friday gold has not shown any meaningful positive dynamic, despite dollar weakness.

    As Reuters reports - the dollar fell after data showed the U.S. unemployment rate increased and wages grew less than forecast in June even as the economy created more jobs than expected. Wage growth is a closely watched signal of potential inflation that could prompt more interest rate hikes by the Federal Reserve.

    Market accepts calmly starting of hot stage of tariff war. Rising stock markets pressure gold prices by reducing safe-haven demand for the precious metal.

    "The tariffs were already priced in," said RJO Futures' Josh Graves. "Gold needs more than a trade war to push it higher. It needs volatility in equities, weaker economic data, a dovish Fed."

    It is possible weakness in stock market, especially if S&P return will converge to rising return on bond market due interest rates increasing, but it is difficult to expect dovish Fed and weaker economic data.

    On Thursday, minutes of the Federal Reserve's June 12-13 policy meeting showed that U.S. central bankers expressed concerns global trade tensions could hit an economy perceived as strong.

    "Traders are extremely cautious when it comes to gold. The intraday price-action has a bullish set-up and shows that the price has potential to test the level of $1,280 in the coming days if the dollar weakness continues," ThinkMarkets chief market analyst Naeem Aslam said.

    India's gold imports fell for a sixth month in June to 44 tonnes, provisional industry data showed. Gold-backed exchange-traded funds (ETFs) saw outflows in North America and Asia, but saw inflows in Europe during June,the World Gold Council said.

    SPDR Fund statistics shows massive real sell-off of physical gold. Thus, in our previous research it was approximately 828 tonnes of gold in storage, while last data shows that it has just 802 tonnes. Another important detail - vast part of sell off has happened last week when fund has lost 19 tonnes:
    upload_2018-7-8_15-28-25.
    COT data also shows negative picture. Just few months ago gold was flirting with all-time overbought levels of net long position, while now net position barely keeps positive value and stands near zero area:
    upload_2018-7-8_15-30-55.
    Yes, right now this drop is accompanied by decreasing of open interest, and could mean that major driving factor is just long closing. But this is natural as net position stands bullish. Open interest could start to rise, when it turns negative.
    That's being said, it is difficult to find fundamental factors that could support gold in foreseeable future. Seasonal trend also stands bearish for gold and should last till the end of the summer.

    Technical
    Monthly


    In technical sphere it is also difficult to find something positive, at least on long-term charts. In June - July gold has dropped below Yearly Pivot, and now price stands right at major trend line support. 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:

    "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.
    gold_m_09_07_18.

    Weekly

    Our previous weekly setup has been completed, as market indeed has dropped after forming minor pennant consolidation and hit our 1262 target. All trend lines support have been broken as well. Now we need to increase the scale here and watch for larger AB-CD. First target stands at 1210 area - in Agreement with major 1215 5/8 Fib support.

    Now price stands neither at oversold nor at some strong support area. In fact, it has free weekly space till 1215 area.

    Still, as you can see, gold has passed through weekly K-area and YPP with no respect. As a rule, in such circumstances, market could take pause and re-test disrespected levels from opposite side. So, despite overall strong bearish view, in short-term perspective within a week or so, gold could show minor upside bounce:

    gold_w_09_07_18.

    Daily

    This time frame is a goldmine of different trading setups. We could separate them in two major groups. One group is isolated trading setups with no relation to bigger picture. In fact, we have two of them. First is B&B "Sell" that is ready to start, as market has good downside thrust in final stage of plunge and market has reached 3/8 Fib level. It means that next week we should get deep downside retracement .

    Second is bearish grabber. I do not show it here, since we already have talked about it 3-4 days ago, but it is still valid. It has been formed on thin market of 4th of July, so I'm not sure that it is 100% reliable, but, it exists on FX PRO chart. This pattern suggests not just a retracement as B&B setup but downside breakout of recent lows.

    Second setup stands in relation to weekly chart and retracement that we've talked about. Indeed, once Double Top target has been hit - gold has formed here nicely looking bullish engulfing. It means that some AB=CD pattern could be formed on intraday chart. Our disrespected weekly former support stand at 1266-1273, while here we also have daily K-resistance of 1278-1286. Thus, this could be possible upside target, if retracement will happen, of course.
    gold_d_09_07_18.

    Intraday

    Recently we already have mentioned reverse H&S pattern and possible deep retracement before upward action will continue. Thus, the same H&S could serve us as indicator of retracement. As usually we will watch for right arm bottom. If gold will fail around it and start dropping back to head's bottom - this will be strong signal on coming downside breakout. Keeping of right arm will keep chances on upside AB-CD right to daily K-resistance:

    gold_4h_09_07_18.

    It's not necessary that price action will be as perfect as I draw here. The one thing is important here. The validity of 1245 level. Market has to hold it to keep chances on upside continuation. In this case, gold could achieve at least 1270 AB=CD target.

    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.

    Still, in short-term gold could get a technical relief. If price will be able to hold above 1245 lows, gold could show retracement at least to 1270.


    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.
     
  2. JOELIBOK

    JOELIBOK Recruit

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    Sir, Great analysis on gold as usual. Great work. Masterfully grafted.
     
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    today we just can't ignore political turbulence in UK and update our GBP setup. On daily chart our 3-drive "Buy" has completed its minimal target - top between 2nd and 3rd Drives. Now, due political collapse GBP shows rather fast sell-off which provides chances for short-term trades or, may be we have fargoing consequences, it is unclear yet...
    gbp_d_10_07_18.

    On 4H chart we've called you to think about half profit taking before Friday NFP, when market was at OP target of AB=CD pattern. Now it has hit XOP and turned down:
    gbp_4h_10_07_18.

    This sell-off takes the shape of two patterns. As plunge is simultaneously reversal swing - usually AB=CD retracement should follow before downside continuation. This should give us "222" Sell pattern. "222", in turn, could become a part of larger H&S, if GBP will really reverse down. Since market is driven by external political factor it is difficult to talk on perspective clearly, since you don't know how long will last the effect of it.
    Thus, let's focus on "222" Sell first, and then we will see perspective of H&S...
    gbp_1h_10_07_18.
     
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    Currently there is no solid action on the market, thus, let's take a look at GBP again. On daily chart price forms 2nd inside session and further direction will depend on breakout. Minimum target of 3-Drive pattern has been completed:
    gbp_d_11_07_18.

    Our "222" Sell setup has worked perfect. Indeed, market has shown 30% drop out from 1.33 Agreement resistance. Now larger H&S pattern stands in focus. Currently it is unclear whether it will be formed or not, because GBP also is forming a kind of triangle or pennant consolidation, which also could be broken up.
    Thus, here we should keep an eye on two moments. Upside breakout of 1.33 will mean that GBP will challenge highs again, while break of A-C trendline support, should lead to appearing of right arm of our H&S pattern and, potentially to 1.3225 AB=CD H&S target:
    gbp_1h_11_07_18.
    Since market stands in contraction mode and forms inside sessions, we have no choice but work with short-term patterns and setups, until clarity will come on daily chart...
     
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  5. JOELIBOK

    JOELIBOK Recruit

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    Hi Sive, Good refresher on gbp. Irrational behavior due fundamental coming from uk govt.
     
  6. Lolly Tripathy

    Lolly Tripathy Master Sergeant

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    Thanks sive sir booking my profit
    It's too early as per ur analysis
    Bt m Happy
     
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  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    So our GBP H&S pattern has been formed, let's keep watching over it. But today, we need to update gold view as it enters final stage of daily trap that we've started to talk 2 weeks ago.

    Our suggestion on daily chart - gold should wash out 1236 lows at least, and, who knows, may be proceed to 1210 target. The major reasons for that - sweety stops, that gold market just can't ingore. This is the habit:
    gold_d_12_07_18.

    Second - we have uncompleted AB=CD targets on 4H chart, which stand below 1236. This increases chances on breakout, or W&R at least.
    gold_4h_12_07_18.

    Finally, on 1H we have minor AB=CD which should lead gold back to 1238 lows. But what the chances that gold will stop there with no attempts to grab the stop? I think they are not too significant.

    As right now gold stands in minor retracement - it could provide good chance for short entry, if, say, some "222" Sell will be formed. This trap could clap even till the end of the week....
    gold_1h_12_07_18.
     
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  8. Lolly Tripathy

    Lolly Tripathy Master Sergeant

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    Hello sive sir
    What about usdcad
    Kindly share a brief view
    Thank you
     
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Lolly, if you take a look at crude oil chart - there was outstanding plunge and price has hit OS. It might be double top.
    This double top scenario doesn't not agree with our suggestion of 3-Drive sell on weekly CAD and possible deeper retracement.
    That's why it will be better to watch first what will happen on Crude oil. Downside breakout could let CAD proceed higher to 1.618 extension of daily butterfly.
    But, if crude oil will turn up again - this will support our 3-Drive weekly scenario.
     
    #9 Sive Morten, Jul 13, 2018 at 2:40 AM
    Last edited: Jul 13, 2018 at 2:46 AM
  10. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Welcome everybody,

    so our trap on gold market is ready to clap and this should happen very soon, maybe even today. On daily chart, as you can see - gold is coming to the lows. So 1236 lows should be washed out and if they will be enough value - gold could reach our 1210 target just by momentum.

    Here we need keep close look at what will happen around 1236 area. Any signs of W&R could provide good setup for fast bullish trade, but will know it a bit later. Right now we're focused on bearish direction and breakout:
    gold_d_13_07_18.

    Here is again, our downside targets of big AB=CD pattern and take a look - butterfly starts appearing right at the bottom:
    gold_4h_13_07_18.

    Our yesterday setup with "222" upside retracement has worked perfectly and now gold has turned down again. If you have missed to take short position with "222" pattern, chances to take short position still exists while gold is above 1238, but you have to catch some minor retracements on lower time frames - something like was on a beginning of new downside leg, when "222" has been completed:
    gold_1h_13_07_18.
     

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