Sive Morten
Special Consultant to the FPA
- Messages
- 18,781
Fundamentals
Although previously all attention was focused on US situation, particularly with ending of tax benefit period and sequestering of budget, but Cyprus turmoil has pushed this on second stage. Situation for gold looks a bit simpler than for EUR and mostly it depends on whether bailout will be provided or not. If not, then Gold could show more appreciation. "The lack of a bailout deal leaves us positive on gold for the short term," said James Steel, chief precious metals analyst at HSBC.
Still, it is very probable that gold shows growth mostly due initial Cyprus shock. When first panic will calm down a bit people will start to think what to do with withdrawn money and with EUR itself. The logical think that could happen is capital running into other currencies and particularly in USD. Since as gold as EUR stand in relation to USD – both of them could return to declining. Because fundamentally, as gold stands bearish – there has appeared nothing new that could justify sudden reversal of gold to USD, and other technical moments confirm this.
SPDR fund continues to loose physical assets and on passing week holdings has decreased for more 11.74. CFTC data shows that speculators slightly have increased net long positions, but this increase was just nominal.
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So, SPDR Fund holdings absolutely does not support Gold price move higher.
In current circumstances we see absolutely reasonable growth of speculators’ net long position as well as open interest. But it’s obvious that we should not overestimate this fact.
Monthly
There are no much changes on monthly chart. Trend holds bearish here. March action looks not very impressive; in fact it is inside small action compares to February.
Previous action and February month showed solid bearish power. Market stands at oversold and has turned to some shallow bounce up. Market has not reached yet major support 1530-1535 area and yearly pivot support 1. Also take a look that all price action holds almost for 2 year in a range of black candle of September 2011. It’s high and low levels now become extremely important, because it could be really significant move after breakout of the low. Harmonic swings also point on 1530 area. So, next target here is 1530, while we still should keep in mind really big picture and possible retracement even to 1200+ area. But now we’re mostly interested in how far to upside this retracement will be…
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Weekly
Trend is bearish on weekly chart. Market, as we’ve said, is recovering from monthly oversold by bouncing up from 0.88 support and 1.618 weekly AB-CD target – rather strong support area. Passed week has become another gradual, medium-size upward action. Since action was really moderate, we will not totally refuse an idea of a bit longer in time retracement. That’s why previously I’ve said that we can’t exclude appearing some reversal pattern that will not be as fast as just single leg retracement or AB-CD retracement, pattern that could include another small leg down. Such pattern as butterfly “buy” for example. If this will be the case – price will reach major 1530 area and simultaneously clear out current lows, that is very typical for gold market. This is first observation.
Market has tested MPP on previous week and first Fib resistance level. Still harmonic swing points on deeper move. Thus, most probable destination point is 1630-1640.
Daily
Well, intrigue on daily time frame still holds and this is reflected by price action as well. As some other markets – gold shows indecision action by forming overlapping trading sessions with average trading range without any direction. Overall upward price action looks gradual and choppy, that is natural for retracement move. From that standpoint we have reasons to suggest that sooner or later downward move will continue. Since market is coiling and building energy – in short term perspective we should be ready for some strong move and with high odd it probably will depend on Cyprus solution. Let’s see will be able to estimate the direction of this splash, by using lower time frames…
4-hour
Since price action was rather choppy on previous week, unfortunately I can’t find absolutely clear solution for current situation. As we’ve said market stands in a range, but on 4-hour chart this range shows creating of higher highs and almost higher lows. Simulteniously we have divergence and bear trend here. This could become bullish dynamic pressure.
Second important moment – this dynamic pressure is forming right at the completion point of AB=CD pattern that we’ve discussed on previous week. This completion point is marked by red circle and this is also deep 88% resistance. What I’m trying to say is if market really intends to turn down after AB-CD completing, this probably would have already happened. But market is continuing to creep higher and this looks suspicious. We have nothing clear yet, but overall price action does not look bearish as it should in similar situation. Still, if we will take reasonable look at situation then it will be difficult to make a decision whether to take long position right now or not. Our expected destiation point is 1630-1635 and now market stands around 1610 – so, upside potential is just 20-25 bucks per contract. But where we will place the stop? Probably somewhere below the lower border of daily small horizon consolidation. This will lead us to an area of WPS1 around 1593. Taking in consideration that overall upward action is a retracement – maybe the better idea will be to wait suitable situation for short entry and do not deal with upward adventure. Thus, if it will be butterfly – there are a lot of room to understand it and take short sell with target around 1530. If market will proceed higher – watch for sell around 1635 area.
Besides, market is too sensitive to Cyprus situation and mostly driven by it. Despite how perfect our analysis will be we can’t predict what news will be released on Cyprus crisis.
Sponsored by Pellucid FX - Premium STP Forex Broker >>
Conclusion:
Fundamental picture has not changed much, sentiment on gold market is moderately bearish and downward move should continue in long-term perspective, although it probably will be a bit slower.
Still, technically market is oversold on monthly chart and has reach significant weekly target that’s why we still expect some deeper upward bounce on daily time frame.
In short term perspective market mostly is driven by Cyprus news. Although technical picture suggests that market could continue move up – overall situation as technical as fundamental tells that better to wait for nice possibility to Sell, rather take suspicious long position.
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.
Although previously all attention was focused on US situation, particularly with ending of tax benefit period and sequestering of budget, but Cyprus turmoil has pushed this on second stage. Situation for gold looks a bit simpler than for EUR and mostly it depends on whether bailout will be provided or not. If not, then Gold could show more appreciation. "The lack of a bailout deal leaves us positive on gold for the short term," said James Steel, chief precious metals analyst at HSBC.
Still, it is very probable that gold shows growth mostly due initial Cyprus shock. When first panic will calm down a bit people will start to think what to do with withdrawn money and with EUR itself. The logical think that could happen is capital running into other currencies and particularly in USD. Since as gold as EUR stand in relation to USD – both of them could return to declining. Because fundamentally, as gold stands bearish – there has appeared nothing new that could justify sudden reversal of gold to USD, and other technical moments confirm this.
SPDR fund continues to loose physical assets and on passing week holdings has decreased for more 11.74. CFTC data shows that speculators slightly have increased net long positions, but this increase was just nominal.
So, SPDR Fund holdings absolutely does not support Gold price move higher.
In current circumstances we see absolutely reasonable growth of speculators’ net long position as well as open interest. But it’s obvious that we should not overestimate this fact.
Monthly
There are no much changes on monthly chart. Trend holds bearish here. March action looks not very impressive; in fact it is inside small action compares to February.
Previous action and February month showed solid bearish power. Market stands at oversold and has turned to some shallow bounce up. Market has not reached yet major support 1530-1535 area and yearly pivot support 1. Also take a look that all price action holds almost for 2 year in a range of black candle of September 2011. It’s high and low levels now become extremely important, because it could be really significant move after breakout of the low. Harmonic swings also point on 1530 area. So, next target here is 1530, while we still should keep in mind really big picture and possible retracement even to 1200+ area. But now we’re mostly interested in how far to upside this retracement will be…
Sponsored by Pellucid FX - Premium STP Forex Broker >>
Weekly
Trend is bearish on weekly chart. Market, as we’ve said, is recovering from monthly oversold by bouncing up from 0.88 support and 1.618 weekly AB-CD target – rather strong support area. Passed week has become another gradual, medium-size upward action. Since action was really moderate, we will not totally refuse an idea of a bit longer in time retracement. That’s why previously I’ve said that we can’t exclude appearing some reversal pattern that will not be as fast as just single leg retracement or AB-CD retracement, pattern that could include another small leg down. Such pattern as butterfly “buy” for example. If this will be the case – price will reach major 1530 area and simultaneously clear out current lows, that is very typical for gold market. This is first observation.
Market has tested MPP on previous week and first Fib resistance level. Still harmonic swing points on deeper move. Thus, most probable destination point is 1630-1640.
Daily
Well, intrigue on daily time frame still holds and this is reflected by price action as well. As some other markets – gold shows indecision action by forming overlapping trading sessions with average trading range without any direction. Overall upward price action looks gradual and choppy, that is natural for retracement move. From that standpoint we have reasons to suggest that sooner or later downward move will continue. Since market is coiling and building energy – in short term perspective we should be ready for some strong move and with high odd it probably will depend on Cyprus solution. Let’s see will be able to estimate the direction of this splash, by using lower time frames…
4-hour
Since price action was rather choppy on previous week, unfortunately I can’t find absolutely clear solution for current situation. As we’ve said market stands in a range, but on 4-hour chart this range shows creating of higher highs and almost higher lows. Simulteniously we have divergence and bear trend here. This could become bullish dynamic pressure.
Second important moment – this dynamic pressure is forming right at the completion point of AB=CD pattern that we’ve discussed on previous week. This completion point is marked by red circle and this is also deep 88% resistance. What I’m trying to say is if market really intends to turn down after AB-CD completing, this probably would have already happened. But market is continuing to creep higher and this looks suspicious. We have nothing clear yet, but overall price action does not look bearish as it should in similar situation. Still, if we will take reasonable look at situation then it will be difficult to make a decision whether to take long position right now or not. Our expected destiation point is 1630-1635 and now market stands around 1610 – so, upside potential is just 20-25 bucks per contract. But where we will place the stop? Probably somewhere below the lower border of daily small horizon consolidation. This will lead us to an area of WPS1 around 1593. Taking in consideration that overall upward action is a retracement – maybe the better idea will be to wait suitable situation for short entry and do not deal with upward adventure. Thus, if it will be butterfly – there are a lot of room to understand it and take short sell with target around 1530. If market will proceed higher – watch for sell around 1635 area.
Besides, market is too sensitive to Cyprus situation and mostly driven by it. Despite how perfect our analysis will be we can’t predict what news will be released on Cyprus crisis.
Sponsored by Pellucid FX - Premium STP Forex Broker >>
Conclusion:
Fundamental picture has not changed much, sentiment on gold market is moderately bearish and downward move should continue in long-term perspective, although it probably will be a bit slower.
Still, technically market is oversold on monthly chart and has reach significant weekly target that’s why we still expect some deeper upward bounce on daily time frame.
In short term perspective market mostly is driven by Cyprus news. Although technical picture suggests that market could continue move up – overall situation as technical as fundamental tells that better to wait for nice possibility to Sell, rather take suspicious long position.
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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