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Gold GOLD PRO WEEKLY, November 04 - 08, 2019

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, Nov 3, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    Gold market keeps going alongside with FX market due the same driving factors that make impact actually on all markets across the board. They are US/China negotiations, D. Trump impeachment noise, US statistics and Fed decision. These factors are universal and make impact on markets in the same direction.

    Yesterday we've talked a lot about them, and come to conclusion that our fundamental model is valid as recent news and numbers mostly confirm our view of more US dollar weakness in medium term perspective.

    Such factors as Brexit, D. Trump's impeachment procedure and US/Sino trade war traditionally have more importance to gold market as it stronger reacts on any political negative news.

    This week gold market has shown nice performance although upward action has started in a second part of the week.

    Gold rose on Thursday as the dollar came under pressure after the U.S. Federal Reserve cut interest rates while uncertainty surrounding a U.S.-China trade deal bolstered the metal’s appeal as a safe-haven investment.

    Prices also got a further boost after U.S. weekly jobless claims rose more than expected last week.
    The U.S. central bank on Wednesday cut interest rates for the third time this year to help to sustain U.S. growth despite a slowdown in other parts of the world.

    “While the central bank signalled a pause in further cuts for now, it also seemed to pre-commit to keep rates low for the foreseeable future,” said Ilya Spivak, a senior currency strategist at DailyFx, adding that a resulting dip in U.S. Treasury bond yields and the dollar were helping gold.


    The U.S. dollar fell to a more than one-week low against leading rivals.

    Gold is highly sensitive to any reduction in interest rates, which decreases the opportunity cost of holding non-yielding bullion. Rate cuts also weigh on the dollar, in which gold is priced.

    Uncertainties on the trade front also supported bullion, with the cancellation of an Asia-Pacific economic cooperation summit in Chile next month, at which the United States and China were expected to sign an interim deal to ease hostilities in their long-running trade war.

    “China said that, most probably, a long-term trade deal is not really possible with Trump; so all that is really helping gold prices higher,” said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

    “Underlying momentum is still positive for gold. For prices to accelerate, we need to break above $1,515, and if that is done, we should be able to get more fresh blood coming into the market.”

    However, news that Beijing could remove extra tariffs imposed since last year on U.S. farm products fanned hopes that a trade deal remains possible.

    Once NFP data has been released, gold has shown minor retracement as better-than-expected U.S. jobs numbers and strong factory data from China bolstered sentiment for riskier assets.

    “For now, gold is under pressure with the positive economic news. ... It will be struggling for some direction,” said Mitsubishi analyst Jonathan Butler.

    “From here, it’s difficult to see what the major upside factors would be for gold other than some geopolitical events, with the U.S. Federal Reserve pretty set on keeping rates on hold for now.”


    U.S. job growth slowed less than expected in October, while hiring in the prior two months was stronger than previously estimated, offering assurance that consumers would continue to prop up the slowing economy for a while.

    “Resistance levels sit toward $1,520-$1,525, with extension toward hard resistance at $1,535.”

    Stock markets took comfort from the October U.S. jobs data and numbers showing China’s factory activity expanded at its fastest pace in more than two years.

    Also lifting sentiment for riskier assets was a statement by U.S. President Donald Trump saying Washington and Beijing would soon announce a new venue for the signing of a “Phase One” trade deal, after protests in Chile resulted in the cancellation of a planned summit there this month.

    In terms of the overall outlook for gold, however, the trend is positive with the metal likely consolidating before moving higher, said Edward Moya, a senior market analyst at OANDA, adding there are doubts that the trade war will get completely wrapped up and investors are also skeptical about jumping into the stock market rally.

    “There’s a strong call for portfolio diversification and people prefer gold over Treasuries.”


    In general we agree with this recent statement as technically as fundamentally gold keeps positive mood. Recent statistics shows slowdown of US economy and press on Fed policy which is promised to become more dovish.

    Despite political situation stands difficult in the world and last word in Brexit process is yet to be said. The European Union’s Brexit negotiator Michel Barnier said on Wednesday the risk of Britain’s chaotic departure from the bloc without a divorce agreement still existed, and that future trade talks would be “difficult and demanding”.

    “The risk of Brexit happening without a ratified deal still exists,” Barnier told a speech in Brussels. “We still need to prepare.”

    “In all member states, there is a big difference in preparedness between bigger companies and SMEs. It’s not time to become complacent. Work with SMEs in particular needs to continue,” he said, referring to small and medium enterprises.


    He said a no-deal split could happen at the end of January, if the British parliament failed to ratify Johnson’s deal and London did not get another delay on the divorce.

    It could also happen at the end of the status-quo transition period envisaged after Brexit until the end of 2020, Barnier said, if no new trade deal is agreed between the two sides by then and no extra time is given to achieve that.

    The Frenchman warned there was precious little time between the Brexit day and the end of 2020 to agree a new trade deal.

    “It will be a difficult and demanding set of negotiations,” he said. “The time we have at hand to conclude this negotiation will be extremely short, 11 months.”

    “Because of our geographic closeness and our economic interdependence ... we want to have solid guarantees on the level-playing field aspects.”

    Barnier warned the bloc will only give Britain as much access to its single market after Brexit as is justified by London ensuring that EU rules and standards are preserved.

    “We will keep a close watch and be extremely vigilant on ... social rights, environmental protection, state aid and obviously on issues of taxation.”

    “We want zero tariffs, zero quotas and zero dumping.”


    Barnier said Johnson’s aim of getting a trade deal with no tariffs or quotas was “insufficient” and that the first “moment of truth” to assess whether more time was needed for trade talks would come next summer.

    “Brexit is not a destination. It’s not an end in itself, at least not for us. It’s a staging post, it’s difficult juncture. But after Brexit... we will need to reestablish all sorts of things.”

    He said those included trade in goods, services and investment, data protection, transport and energy, fisheries, judicial and police cooperation, foreign policy, security and defense.

    While he stressed the bloc was keen to keep Britain close in the all these fields, things would change.

    “Once the UK has left the EU, they cannot be treated as a member. They will be a third country with a special relationship, very close,” Barnier said. “Brexit does not mean business as usual. Brexit is breaking away from almost 45 years of partnership.”

    Recent CFTC report confirms bullish sentiment on the market as net long position turns to grow again:
    upload_2019-11-3_14-9-55.
    Source: cftc.gov
    Charting by Investing.com

    Recent SPDR Fund data also shows good performance. Within last 2-3 weeks in our video updates we talked that market keeps bullish sentiment but it just can't form any clear bullish continuation pattern, although overall performance looks positive. And SPDR data now confirms this. Take a look, while gold has shown retracement from 1550 top - SPDR storage was keeping growing.

    upload_2019-11-3_14-25-5.

    Thus, combination of driving factors makes us suggest that gold market should continue upside action, at least in nearest few months.

    Technical
    Monthly

    As gold stands in tight trading range - we do not have any impact on monthly chart yet. Gold stands in reaction to strong resistance area and October is inside month by far. The resistance here is strong and valuable and it deserves meaningful retracement. But currently it is too few signs of real retracement. September drop was too small and mostly reminds consolidation around the level rather than retracement, and October is almost reversed it up.

    Price doesn't go down and stands near the target. Major Fib level has not been reached as well. This is not the way how usually bearish reaction develops. It means that gold keeps bullish sentiment and could prepare for upside action. But, for the truth sake, potential upside action has limited chances to become a breakout. Most probable that upside action will happen but not exceed our 1585$ border.

    Thus, we keep this area - 1530-1585 as tactical ceil by far, but, as we have additional driving factors, we should pay attention to daily and intraday performance, just to not miss the signs of upside continuation which starts to appear this week.

    In general, combination of butterfly target, major 5/8 Fib resistance and monthly overbought is rather strong barrier. Something really outstanding has to happen to force gold break it without respect. At the same time, the way how this respect will start is still unclear. Gold has a lot of freedom in this subject as it could flirt with resistance some time before major reaction will start.
    gold_m_04_11_19.

    Weekly

    We still keep our suggestion of DRPO "Sell" pattern and appearing of its 2nd top. This week we finally see 2nd close above 3x3 DMA, but upward action is not enough yet to treat it as second top of DRPO. So, if our trading plan is correct - this is just a beginning of upward action and gold has to move higher. The perfect shape is price close above 3x3 DMA, forming a new top of DRPO pattern reaching XOP target.

    Taking the broader view on market performance, previously weekly chart is the one that explains why we think that gold is bullish still. As we know any real retracement should be strong, because drop always faster than rally due emotions. Fear is stronger than greed. But gold doesn't show any fear. Pullback is slow and small as price has not reached even near standing Fib support. XOP is still untouched. So, our suggestion - gold is forming consolidation before final upside leg.

    That' being said, despite that smell of the retracement in the air - gold stands stubbornly too tight to the top - which means that major downside action is somewhere in the future and we can't ignore possible return back to the tops first.
    gold_w_04_11_19.

    Daily

    Friday action was inside one to Thursday rally. Our Grabber pattern is still valid and its target is not completed yet as market has not taken out the previous top yet.

    As we said, based on swings calculation, theoretically now we stand in extension leg to OP target. This is the reason why we do not expect deep retracement on intraday charts. Indeed, retracement of Friday was small and price has closed near the top again.

    1520 is strong enough resistance but it has been tested three times already. Thus, gold has good chances to show breakout next week. If this will happen indeed - our next target is OP at 1534 area.
    gold_d_04_11_19.

    Intraday

    As we've said on Friday - retracement should not be deep - 1500 is maximum. We treat it as confirmation of our suggestion that indeed, market stands in extension mode. On 4H chart we got another bullish grabber, which suggests upward action above previous top.

    In fact, we should get 1520 challenge again next week. For gold market is it crucial to show upside breakout. In this case gold will enter in resistance free area and improve chances on upside continuation.

    At the same time, it is difficult to trade it. If you've missed chances to take long position this week - currently you have to take more risk, trying to jump in train right under resistance and hope that gold still will break it up. Or, you have to just wait for another valuable retracement. In former case your driving factor will be grabber on 4H chart:
    gold_4h_04_11_19.

    Conclusion

    We do not see any negative shifts in our major fundamental background by far. Recent statistics and events support gold market. Technically, it is vital to show upside breakout of 1520 $ level next week and it makes difficult to trade it right now as price already stands near resistance area. Any new trade right now involves more risk compares to beginning of the week situation.
     
    Vokin, chalo, cercamon and 4 others like this.
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    So, as EUR - Gold market was not able to proceed higher as well, but we do not see any reasons to worry about yet. Take a look that market is still coiling around the top and the pullback is so slow that both candles stands in the Friday's range. Price action definitely shows the feature of retracement and it doesn't hurt our bullish scenario by far. Thus, on daily we still expect upside action to 1534 OP target.
    gold_d_05_11_19.

    On 4H chart we keep an eye on particular pattern which could lead price to OP. This is the butterfly "Sell", very similar to EUR as well. As a you can see gold has pretty much room to fluctuate as crucial bottom stands rather far from current price:
    gold_4h_05_11_19.

    1H chart shows that downward action is very choppy and slow, which confirms the retracement nature. Based on extensions that we have, it seems that gold could turn up either from 1500 Agreement area or, from major 5/8 Agreement with larger COP target. Let's track these scenarios by far:
    gold_1h_05_11_19.
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    Again, on gold market situation is very similar to EUR. Here downside action also has overcome our expectation and moved out of previous lows, erasing chances on appearing of upside butterfly pattern. Thus, challenge 1520 level has failed yet to be started.

    In fact Gold has formed downside reversal swing which drastically changes short-term perspective. Besides, upside flag breakout false and now we could talk on bullish trap action, which suggests more downside motion.
    gold_d_06_11_19.

    Here we intend to use the same AB-CD pattern as yesterday. Yesterday we've mentioned retracement and expected downside action, but price has dropped through our COP target without any respect right to OP point. But, taking in consideration the power of collapse, it seems that we should be ready for continuation to XOP, i.e. price returning to previous lows.
    gold_4h_06_11_19.

    Now, as price stands at OP - some upside pullback should happen, but once it will be completed - downside action has good chances to continue. Upside bounce probably could reach 1490-1495 area.
    gold_1h_06_11_19.

    Thus, as on EUR as on Gold we're watching for minor upside retracement and then downside continuation, supposedly to XOP targets.
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    Gold shows almost the same performance as EUR. They have similar setups and even price action stands similar. On daily Gold we could say that recent reversal was not a failure attempt of 1520 breakout but it was a continuation of 2-leg retracement, because price turned down prior reaching of the previous top and 1520 level.

    Sell-off was rather strong, it has good momentum that makes us suggest downside continuation:
    gold_d_07_11_19.

    On 4H chart, as reaction top OP target is done, we have two support areas. First is 1480 natural support, second - 1460 XOP target and previous lows.
    gold_4h_07_11_19.

    Our upside AB=CD retracement was done accurately and finished precisely at specified 1490-1495 area. So, if you have taken short position - now it is time to think on stop managing. If you just intend to go short - we need to wait when another chance will be formed, or use lower time frame (5-15 min) minor retracements:
    gold_1h_07_11_19.

    We do not see yet any attractive bullish setups here.
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    While Gold keeps our scenario well and is coming to 1450-1456 target, let's take a look at GBP. It is long time since we've taken a look at it...

    Brexit topic is silenced a bit, at least in last two weeks and that makes impact on the chart too. Price turns to sideways action. Technically this is absolutely natural behavior as GBP hits weekly Obought and daily K-resistance area. At the same time, GBP stands well under the top, showing no panic and massive sell-off, which means that upside continuation should follow.

    This makes us suggest appearing of flag pattern:
    gbp_d_08_11_19.

    4H chart shows more details on it. Inside the flag we have AB-CD pattern. CD leg shows slowdown, which increases chances on reversal action at OP target. OP itself is accompanied by Fib level and MPP. Currently, while other things stand equal, it seems that uspide continuation should start in 1.27-1.2750 area:
    gbp_4h_08_11_19.
     
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  6. Lolly Tripathy

    Lolly Tripathy Sergeant Major

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    Dear Sive sir, please continue gold prediction.. we need further support and oversold area..
     
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  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Lolly,
    Now we are watching for 1450-1456 target area. This is weekly K-support area and 4H XOP target.
     
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