GOLD PRO WEEKLY, July 30 - 03, 2018

Sive Morten

Special Consultant to the FPA
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Fundamentals

In previous report we've made detailed update of ongoing processes that make major impact on gold market. Results of our analysis are not very encouraging for bulls as gold is passing through difficult times.

Last week major focus was, of course, on GDP release. First reaction was mixed. Despite very good numbers, gold has not dropped significantly. We think that this is temporal confusion. On coming week some downside action should follow.

As Reuters reports - gold inched higher on Friday as the U.S. dollar slid lower after strong U.S. economic growth data while concern remains about trade tensions between the United States and Europe.

The dollar slipped against a basket of currencies as data showing the U.S. economy rang up its strongest quarter in nearly four years failed to erase worries that trade frictions would be a drag in the second half of 2018.

“The dollar weakened and treasury yields came off,” said Walter Pehowich, executive vice president of investment services at Dillon Gage. “Dollar weakness looks like it will continue and gold will see some short-term support.”

Benchmark 10-year U.S. Treasury yields slipped from their highest level in 1-1/2 months.

In the physical markets, gold demand in India improved this week as domestic prices traded near a six-month low, while weaker rates in Singapore prompted a pick-up in demand there. Demand remained weak, however, in top consumer China as the yuan fell.

“We believe price action (in gold) is likely to be subdued in the coming weeks (as) physical demand is in the middle of a seasonally slow period, short interest in gold has risen as prices have fallen and there are 200 tonnes of loss-making ETF positions that could be liquidated,” Barclays said in a note.

Spot gold is expected to fall into a range of $1,206-$1,214 an ounce, Reuters technical analyst Wang Tao said.

“A key level of resistance will be $1,236, the double-bottom from a couple weeks ago,” Pehowich added.

This mostly agrees with our estimations that we've made in last report and in daily updates.

COT report

Recent CFTC data also brings nothing good to bulls. Net speculative position has turned short on a background of rising open interest. This is clear indicator of bearish trend, as not just long covering but just opened real short positions stands on the back.

upload_2018-7-29_12-20-32.png


SPDR fund restores some reserves, that amount is very small. Fund was able to add just 3-4 tonnes to 802 tonnes and last two sessions reserves dropped again back to 800 tonnes.

Thus, as fundamental background as sentiment are stand moderately bearish. And this doesn't look surprising as we've discussed some dollar supportive issues yesterday.

Technical
Monthly


Technical picture on gold market now is one among most attractive for trading as gold forms a lot of clear patterns and setups.

Slowly but stubbornly gold market moves lower and result of this move could be seen even on monthly chart. The crucial, decisive bearish moment happens not now, it has happened at the end of 2017.

Although July candle is not finished yet, but market shows downside breakout of major monthly trend line. As we've said last time - "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. That was decisive moment that we've mentioned:

"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. Next target here stands at 1180 of YPS1.

Weekly

Last week was inside one and barely impacts on technical picture. Our major context here is strong weekly Agreement support. This is a combination of AB-CD target and major 5/8 Fib support. Common sense and normal price behavior suggests at least minor response to support. On weekly chart this could be 1250-1270 retracement.

Second issue is a thrust down from 1365 top. Theoretically it is suitable for DiNapoli directional pattern either DRPO or B&B "Sell". B&B could be formed if market will reach 1270 major 3/8 K-resistance of the thrust.

Right now we're watching for clear pattern that will start upside reversal on daily. The fact that gold has dropped below MPS1 suggests that downside trend will continue.
gold_w_30_07_18.png


Daily

Major patterns here we've already discussed on Friday. They are bearish grabber and reversal session - mostly the same as on EUR. Both patterns suggest bearish action on coming week and significantly increase odds of W&R of previous lows.

Besides, overall price action mostly stands flat without any signs of upside thrusting action, which is necessary sign of started upside action. It means that another dive could happen before real upside retracement will start.

Finally, market keeps harmonic swing very accurately and it already has been completed recently.
gold_d_30_07_18.png


Intraday

Analysis above leads us to conclusion that most probable pattern that we should keep an eye on is butterfly 'Buy" with 1205 destination point. Appearing of bullish engulfing recently suggests minor upside retracement before action to 1205 will start:

gold_4H_30_07_18.png


On 1H chart market indeed has shown upside bounce from our 1220 level and completion of XOP target. Bounce up lets move stops to breakeven for those who have taken long position due our Friday's video, or even take profit partially.

4H engulfing pattern takes the shape of reverse H&S pattern - the same as on EUR. Thus, here we suggest mostly the same pattern for watching and taking short positions - "222" Sell", or H&S failure, if gold will not be able to start upside action at all.
gold_1H_30_07_18.png


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 as it has hit major weekly support area.


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.
 
Greetings everybody,

It is important to take a look at gold today, because you could see its condradiction with EUR. While on EUR we see upside intraday rally - there is nothing of this kind on gold. This indirectly confirms our doubt on reliability of EUR rally.

On gold market price totally corresponds to daily patterns, which are bearish grabber and dynamic pressure. Indeed, while we keep valid our weekly setup concerning possible upside bounce, but we do not have yet any clear bullish pattern on daily that could trigger this bounce. One thing that we see is that gold should drop below 1210 before any other action will follow:
gold_d_31_07_18.png


This makes us thing that major pattern that could trigger upward action is butterfly and nearest downside target is 1205:
gold_4h_31_07_18.png


Now take a look at 1H chart. The same reverse H&S setup on EUR has been completed, while here it has failed as gold was able to form AB=CD upside retracement. This divergence brings nothing good to EUR.
Houlry chart points on downside action back to the lows:
gold_1h_31_07_18.png
 
Greetings everybody,

Today our gold market analysis doesn't need any update and we will take a look at CAD instead. Those of you who use our CAD analysis or, tracking it, probably remember that last time we've talked about large weekly 3-Drive "Sell" that was finalized by daily butterfly. Our setup was deep retracement down and first part of this setup is coming to an end.
Take a look, at daily chart CAD has completed AB=CD pattern and reached major K-support. It also complets butterfly's minimum target. Now we do not talk about longer perspective but mostly are interested with possible reaction on this support.
If you will take a look at Brent chart, you'll see that oil starts dropping which supports suggestion of upside retracement here, on CAD:
cad_d_01_08_18.png


Market also has completed minor ab=cd target on daily CD leg and hit WPS1:
cad_4h_01_08_18.png


The one thing that we do not have yet is clear bullish reversal pattern. But, we have strong MACD divergence, and overall price shape makes me think that we should get a kind of wide H&S shape. It doesn't mean that we should jump in immediately, but we should keep under control this setup, because it is very promising.
cad_1h_01_08_18.png


Actually there are two major ways how you could take a position here. First one is take it right now with stops below daily OP, because market stands very close to support and now you could place tight s/l order. Your major count here is on strength of daily support area.
Second - wait for Fed results and then watch for bullish patterns, for example "222' Buy if market will confirm H&S shape.
 
Greetings everybody,

Today we again will take a look at Gold. Our CAD setup is still valid, loonie is coilinng around the same area still, but we hope that upward action finally will start...

Meantime on gold situation is developing in a agreement with our weekly report. Price has not shown a bit overextended upside retracement, as it was on EUR, and recent reaction on hawkish Fed statement was absolutely reasonable.

Thus, gradually we're moving to previous lows, which should be taken. We still keep on table possible upside retracement and response on strong weekly support, but first market has to form clear bullish reversal pattern here:
gold_d_02_08_18.png


And most probable that it will be 1205 butterfly 'Buy'. As market has hit OP target of inner AB-CD pattern, it has not shown any signs of reversal but just hold upon OP level which reminds bearish dynamic pressure. Now two bearish grabbers have been formed. This leads us to expectation of downside continuation till the end of the week:
gold_4h_02_08_18.png
 
Welcome everybody,

So, its time to update gold analysis as market has hit our target for this week and completed first stage of weekly setup. Now it seems everything good as Gold has hit 1205 target and this is indeed stands so, but major concern stands on perspectives as they are not as simple and cloudless.

Recall our weekly setup - market at weekly Agreement support and possible upside bounce still stands on the table. Last week we've talked about bullish pattern that was needed to trigger upward action. Now we have it. This is butterfly "Buy". But now we have another concern - from what point upside action could start - 1.27 or 1.618?
gold_d_03_08_18.png


And how combine it with shorts that we hold now? So, our first call is to close at least 50% of the short position. Currently market stands at support and it has completed some important targets - 1.27 butterfly, AB-CD XOP target and even smaller AB=CD:
gold_4h_03_08_18.png


Still, we can't ignore some acceleration down, right to the targets. It means that chances on final drop to 1.618 butterfly extension are not equal to zero. At the same time, some response to current support should follow. Besides, some risk exists that real upside reversal could start right from 1205, right? What to do in current situation?
1. Grab profit of 50% of your shorts.
2. Tight stops on 2nd half slightly above 1214 Fib resistance. If market indends to go down more - upside reaction will by moderate and hardly exceed 1214-1216 Fib resistance area. Gold has a habit to re-test broken lows and here are some important lows stand. Conversely if indeed market will start reversal, 1214 will be broken. So this is crucial level. But if you want to take bet on further downside continuation, you need keep stops slightly above this level, just to not be washed out by reasonable upside retracement.

3. Don't be hasty with taking long position, if you trade on daily/weekly chart. Market stands in long-term bearish action. Any strong upside action will trigger deep retracement. Besides, right now we do not have any clear bullish reversal patterns on houlry chart. Of course, you could try take position based on 4H butterfly directly. In this case move stops to breakeven as soon as possible - when market starts to show upside action. But this is more suitable for scalp traders, who trades on hourly TF and lower.
 
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