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Gold GOLD PRO WEEKLY, July 22 - 26, 2019

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Jul 21, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    Gold mostly was driven by the same factors as Forex market, speaking on William's comments in particular. Next week there are also will be common issues - GDP release, ECB rate decision, but also UK PM appointment and two weeks ahead - Fed meeting.

    As Reuters reports, on Friday gold has turned to retracement as the dollar firmed and investors took profits after prices briefly surpassed our major $1,450 target to hit a six-year peak on dovish signals from the U.S. Federal Reserve and is still on course for a second week of gains.

    “Speculators and traders are taking some profits off the table after the good gains we had in the past two days. Also, there is always a little bit of pressure on gold when the dollar is up,” said Michael Matousek, head trader at U.S. Global Investors.

    Prices have risen about 3% in the past two days on increased expectations for a rate hike by the Fed at its month-end meeting.

    “With a breakout in gold market, positions have gotten larger and more players are in. So, it can get quite a bit more whippy,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

    The dollar was about 0.3% stronger against a basket of currencies, recovering from a sharp fall after top Fed officials on Thursday argued for the need to quickly stimulate the economy, cementing bets that the U.S. central bank will cut rates at its July 30-31 policy meeting.

    “Gold is still looking good. The interest rates and dollar environment, uncertainties over the U.S.-China trade war and now the geopolitical situation being the icing on the cake; all of this has created a very supportive environment for gold,” said Mitsubishi analyst Jonathan Butler.

    Consumers in leading Asian hubs continued to sell off physical gold this week, with some switching their holdings to silver, after a jump in prices that also attracted interest from investors betting further gains.

    “Demand has been muted, with most people selling off gold to take profit,” said Brian Lan, managing director at Singapore dealer GoldSilver Central.

    However, with many people looking to rebalance their portfolio “gold is the asset to be in this year”, he added.

    “Investment buying has picked up somewhat,” said Samson Li, a Hong Kong-based precious metals analyst with Refinitiv GFMS, adding that prices would have to hold near cureent levels for longer to trigger more interest.

    “For the past few weeks, demand has been very weak. Jewellers have enough stocks and they don’t want to buy at record levels,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant in the southern city of Hyderabad.

    “Price rises in the world market and a duty hike by the government is prompting a few people to book profits,” said one Mumbai-based dealer with a private bullion-importing bank. “They’re selling old stocks instead of buying.”

    Among other driving factors, that is more strategical and longer term, we could name crucial slow down of Singapore export and rising demand from Central Banks.

    Thus, on first issue, Singapore exports endured their biggest fall in more than six years amid the worsening global trade climate - and analysts say a recovery in the second half of the year is now looking less likely.

    Non-oil domestic exports (Nodx) fell by double-digits for the fourth straight month in June, with shipments in the key electronics sector sinking by around a third.

    "The recent set of bad data has dashed any hope of a recovery in the second half. Typically, by the middle of the year, we should see numbers stabilising. But instead, we see further decline. The pace of decline has also accelerated."

    The Nodx figures follow a "long string of awful data", Mr Seah added, with no respite in sight.

    Nodx slumped 17.3 per cent compared with a year ago, down from a revised 16.3 per cent fall in May, Enterprise Singapore said yesterday. It was the biggest year-on-year drop since February 2013 and sharply below analysts' expectations of a 9.6 per cent fall in a Bloomberg poll.

    UOB economist Barnabas Gan said Nodx for the first half of the year has seen its worst performance since the first six months of 2009, during the global financial crisis.

    [​IMG]

    Well-known Gold market expert, Mr Barnabas Gan said: "While headwinds against exports are not isolated to Singapore alone, further contraction in Nodx is likely to be on the cards, given the ongoing trade slowdown seen across Asia."

    He added that trade figures from South Korea, Indonesia and China have been lacklustre, and semiconductor sales in the Asia-Pacific are at their weakest since August 2009.

    Exports to most of Singapore's top 10 markets fell last month, with shipments to Hong Kong, China and Europe leading the decline.

    The US was an exception, and ING economist Prakash Sakpal noted it is likely due to the underlying strength of the US economy.


    As World Gold Council reports, Holdings in global gold-backed ETFs and similar products rose sharply in June by 127 tonnes (t) to 2,548t – equivalent to US$5.5bn in inflows – as geopolitical uncertainty increased and central banks signalled a shift to a more accommodative policy over the coming months. This drove rates and the US dollar lower and shifted the momentum in gold as its price moved to a six-year high.

    Global assets under management (AUM) in US dollars rose 15% to US$115bn, the largest monthly increase since 2012, as all regions experienced inflows.

    upload_2019-7-21_13-48-50.

    Finally, Central banks bought more gold in 2018 than at any time since the early 1970s – and the trend has continued this year said Isabelle Strauss-Kahn, Member of the Advisory Board of the World Gold Council, former Director of Market Operations at the Banque de France and former Lead Financial Officer at the World Bank.

    Among major driving factors stand heightened uncertainty about the global economic and geo-political outlook and second, gold’s intrinsic value as a reserve asset, trade tensions are a major unknown, global geo-political risks have not abated and may have a negative impact on economic activity. Idiosyncratic risks are increasing too, such as the rise of populist governments in Latin America and across Europe.

    The dollar is the most widely held reserve asset but, according to International Monetary Fund statistics, gold comes third, accounting for 11% of global reserves. Having been net sellers until 2000, central banks have been net buyers ever since. In 2018 alone, central banks bought 651 tonnes of gold, up 74% compared to 2017 and the highest level since 1971. Over the past decade, central banks have purchased more than 4,300 tonnes of gold, taking their total holdings to around 34,000 tonnes today. The trend has continued in 2019, with net purchases reaching 90 tonnes before the end of the first quarter.

    Notably too, central bank buying has been geographically diverse. Russia has been the most committed purchaser of gold – acquiring almost 275 tonnes in 2018, the largest amount ever purchased in a single year. China has been consistently adding to its reserves as well, but many other emerging market countries have been accumulating gold over the past year and more, including Hungary, Poland, Egypt, Kazakhstan and India.

    upload_2019-7-21_13-58-2.

    These comments and tendency, with remind that Basel III standard has changed bank reserves for gold assets from 50% to 0%, now gold equals to cash in banking capital, supports our long-term view on new global upside trend on gold market. Despite that in short-term perspective we follow some tactic issues, such as economy statistics, Central Banks policy etc. and expect technical retracement, in longer-term view we're still bullish and think that current 200$ rally is just a beginning. Within few years more political risks to come, starting with 2nd D. Trump presidency, which definitely will exacerbated to 2024-2026 years, when term will be over not for the D. Trump, but V. Putin as well. Our view is global financial system stands at the eve of radical reformation, which should trigger unprecedented demand for gold among all countries to pass through this reform. Role of gold probably also will change in IMF SDR conception.

    Technical
    Monthly

    On technical side we do not have a lot of new issues. This always happens when market hits some global target. In our case this is monthly 1450. Now our task is to wait for reaction on this target. As a rule, this is moderate retracement, that could see as trend down on daily chart and could provide a lot of good trading setups.

    The one thing that we could add here, on monthly is acceleration to the target, almost the whole way was passed just in one month. As a rule, it means that gold should proceed at least to 1.618 butterfly target when retracement will be over.

    Second moment here is standing above YPR1, which means that we're in a new long-term bull trend here

    Retracement we discuss on lower time frames, while here we have next two upside targets - 1530$ of 1.618 butterfly extension and 1655 as XOP target of the same major AB=CD pattern.

    Thus, our harmonic reverse H&S pattern hits minimal OP target and can't failed any more.
    gold_m_22_07_19.

    Weekly

    Here weekly OP has been hit as well. Market stands at weekly Overbought. This is perfect combination for tactical short trades on lower time frames. Technically market has no reasons to form new tops or W&R as major targets have been completed on all time frames. In fact we have bearish "Kibby trade" by DiNapoli framework. This is analog of Stretch pattern, which is combination of OB/OS + Fib level, Kibby trade is combination of OB/OS + Extension.

    Nearest support stands at 1380 area. Also overall situation on Gold market makes difficult to follow idea of strong trend against the dollar on FX market as a result of major events of coming two weeks. It more suggests opposite action, that dollar should rise, which provides hits as on positive GDP data, dovish ECB decision and neutral Fed statement.
    gold_w_22_07_19.

    Daily

    Here we already talked about potential bearish position on Friday. Daily XOP and butterfly target have been reached as well. Right on top we have bearish engulfing pattern, which also shows the feature of as I call it "2-bar grabber". When grabber's feature appears not in single session but in two side-by-side session.

    Weekly + daily analysis tells that market could start action to weekly 1380 support, which is K-support here of 1370-1380 levels. The daily OS level stands close. Grabber suggests drop below 1400 area.

    As we mentioned previously, it is not needed to hurry up with short entry. Those of you who doesn't trade on intraday chart, could wait for extended bearish pattern here, which has good chances to appear soon, as retracement has monthly background. Most probable is H&S pattern. So you could skip/miss first downside action to 1380 and try to go short around right arm's top around 1425 area again.

    Others, who trades more often could try to ride as on slope of the head as on the H&S totally.

    gold_d_22_07_19.

    Intraday

    Daily analysis makes our task relatively simple, as on FX market. We do know our invalidation point - this is the top of daily engulfing pattern. Hence, while market stands below it, we could focus on short entry.
    On 4H chart we could take in consideration bearish divergence:
    gold_4h_22_07_19.

    While our major time frame is 1H. Fast acceleration to OP suggests downside continuation to XOP target. Thus, we have to suitable levels to watch for short entry - 1328 and 1432 K-resistance area.
    gold_1h_22_07_19.

    Conclusion

    No doubts, gold keeps positive mood, shows great upside impulse and fundamental background for continuation. Our major 1450 target has been hit and nearest few weeks (or may be months) we intend to trade moderate retracement down. Clear setup on gold puts the shadow on bullish perspective of EUR/USD and other currencies, which makes us think about dollar supportive results of coming events - ECB meeting, GDP release and Fed meeting.

    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. Deltoid88

    Deltoid88 Sergeant

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    Update on GOLD. I agree with Sive's view on gold. I also expect significant bearish action, but here I want to show you scenario where that bearish action is not retracement, but impulsive action which could lead us to new lows under 1160 level. Even if this scenario fails, even if bullish action has started, significant retracement is still expected to downside. So, I am only interested in selling gold in upcoming weeks and months.

    Monthly chart: This is key chart what could be going on. 1450 target was indeed important target, and by reaching it, Gold has plenty of space to go lower. Whole this upside action could be just wave 4 correction on previous drop. If that is correct we can go much lower in wave 5, under 1000$ level even, and then true bullish action could start.

    XAUUSDmMonthly.

    Daily chart:

    XAUUSDmDaily.

    4 H chart: Here I want to show scenario for one more puny higher high before true downside action could start, but maybe true downside action already has started. It is risky to chase it.

    XAUUSDmH4.

    How to trade this?

    1st position: Long entry in zone 1423-1427, SL=1414, TP zone = 1452-1470
    2nd main position, sell entry in zone 1452-1470, SL=1501, TP1 zone = 1200-1300, TP2 zone = 1000-1050
     
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    On Gold market we have tactical trading setup, which should last for few weeks or even months and suggests downside response on major 1450 target. As we said in weekly report - on daily chart we have bearish grabber, which is also bearish engulfing pattern and our floor for the week stands approximately around 1400 area:
    gold_d_23_07_19.

    Currently we're mostly focused on 1H chart. It seems that our suggestion concerning very steep AB-CD pattern was correct and after minor pullback market continues action to XOP target. Now price stands at trend line support (the former triangle that we've traded last week).

    The XOP target creates an Agreement with 5/8 Fib level. Thus, this is our first destination point. Once it will be reached, upside bounce should follow before major extension down, based on daily engulfing. This is our short-term trading plan for now - "XOP @ 1410" - upside bounce - downside extension. Somehow major fundamental events should be involved in this action
    gold_1h_23_07_19.
     
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  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, as in medium-term perspective we discussed everything and wait for moderate downside retracement, today we focus on minor questions. On daily chart we do not have anything new. It seems that market has completed first leg down and now is preparing to start an extension. Our floor is the same for this week 1400:
    gold_d_24_07_19.

    On 4H chart gold was not able to break down the trend line, even on support of new US debt ceil, which has been increased and should be enough for couple of years. This makes us think that upside AB=CD bounce is possible on 4H chart. Also keep an eye on bearish grabber...
    gold_4h_24_07_19.

    If we will get the grabber, then different scenario could be formed. Yesterday we briefly talked about it - butterfly. While market stands inside its swing - butterfly is possible and downside action could start by "222" Sell" pattern. Butterfly target coincides with our XOP here and 1411 Fib level:
    gold_1h_24_07_19.

    Thus, it could be tough challenge to recognize early what particular pattern is forming. As we're mostly watching for downside extension, we need upside pullback. Thus, any long position currently stands beyond of our trading plan and makes it more simple. So, we will keep an eye on upside retracement that either already underway or should start after XOP will be hit. You could find more trading setups around but all of them are too small scale for our update.
     
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  5. Deltoid88

    Deltoid88 Sergeant

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    Update on GOLD. I believe downside action has started, and that we wont see new top above 1452 for very long time. Also I think short entry should be placed immediately, in 1420-1425 zone.

    Monthly chart: I remind you on my monthly analysis. Space to downside is very big. Everyone is so positive on gold right now, if new events appear which could be very negative for gold, like bullish FED, gold will go down significantly.

    XAUUSDmMonthly.

    1 H chart: Here I want to show you that retracement to upside could be finished now if this triangle is correct. XAUUSDmH1.

    How to trade this?

    Sell entry in 1220-1225 zone, SL1=1430, SL2=1453, TP1 zone = 1367-1391, TP2 zone = 1000-1100
     
    #5 Deltoid88, Jul 24, 2019
    Last edited: Jul 24, 2019
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  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings folks,

    Today we need minor update on intraday picture, so we do not need daily picture. On intraday chart market right now forms opposite signals. Thus, on 4H chart, AB-CD upward action has happened, but gold has not completed CD leg and turned to flat action, forming reversal candle:
    gold_4h_25_07_19.
    On 1H chart, from one point of view, recent top holds and "222" Sell indeed has been formed, but following long-term retracement doesn't correpond to bearish sentiment and our idea of downside butterfly. It is too extended sideways action. Besides, we've got minor bullish divergence right now. Thus, we do not exclude upside leg to complete 4H AB=CD and upside butterfly could be formed here:
    gold_1h_25_07_19.

    Our conclusion is - neither bearish nor bullish setup looks strong and reliable enough. Our call is to wait for clarity. But in current situation it would be better to not take any shorts by far.
     
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  7. Deltoid88

    Deltoid88 Sergeant

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    Update on GOLD. Triangle failed, upside correction had little different shape, but downside action did occur. However, it looks like it was wave 5 as last part of recent drop. Now I expect upside correction on whole downside action from 1452, and after that strong bearish acceleration in potential wave 3.

    1 H chart:

    XAUUSDmH1.

    How to trade this?

    1st position: Long entry in zone 1413-1418, SL=1410, SL2=1400, TP zone = 1427-1436,
    2nd main position: Sell entry in zone 1427-1436, SL=1453. TP1 zone = 1370-1400, TP2 zone = 1000-1100
     
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  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Morning guys,

    It is not too much to talk about on technical situation. Yesterday Gold mostly has shown reaction on US statistics, on Good orders and Initial Claims - both numbers were positive. Our suggestion on possible final upside leg and appearing of butterfly pattern on 1H chart seemed to be correct.

    Now price has hit finally our XOP target and stands at 1410 support area, showing upside reaction. We expect dollar supportive results of GDP release and Fed statement. Combining this suggestion with daily engulfing pattern lets us to suspect appearing of AB=CD pattern with 1395$ desistination point, which agrees with daily 1400 Fib support and oversold level:
    gold_1h_26_07_19.
     
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