Gold GOLD PRO WEEKLY, November 11 - 15, 2019

Sive Morten

Special Consultant to the FPA
Messages
12,710
Fundamentals

This week gold was driven by the same factors which are common right now for all markets. Yesterday we've discussed their impact on FX market and EUR in particular. Today we consider their effect on gold market.

In general, there are only two of them have greater value - NFP and ISM statistics that was mostly positive and anticipation of US/China tariff agreement signing. The latter one in particular keeps investors in positive mood, supporting demand for risky assets and pushing stock market higher. At the same time, its effect on gold market was negative.

As Reuters reports - Gold extended losses to a three-month low on Friday as positive developments in U.S.-China trade tarnished the metal’s safe-haven appeal, putting it on track for the biggest weekly decline in three years.

“We are seeing a rally in risk markets, dollar surge and equities reaching an all time high. There had been a portion of long positions built up in the last few months and we are starting to see those liquidating,” said Ryan McKay, a commodity strategist at TD Securities.

“(Also,) we have had a lot of optimism on the trade front, a lot of news on potential rollback on tariffs and the China deal, which had been the major headwind for growth throughout the last year.”


Tariffs could be lifted if a U.S.-China trade agreement is reached, a White House spokeswoman said, giving no further details.

The dollar hit a three-week high against key rivals, while global equity markets slid, a day after they surged to a 21-month high.

Uncertainty about the trade talks, however, prevailed as U.S. President Donald Trump on Friday told reporters that he had not agreed to roll back tariffs on China.

“We are trading on a lot of speculation right now and there’s no solid evidence or anything specific,” said Craig Erlam, OANDA senior market analyst.

The trade war was one of the key reasons for bullion, which is considered a safer asset during economic and political uncertainties, rising about 14% so far this year.

Gold also benefited from dovish monetary policies by global central banks, but the Fed’s recent decision to hold back on further cuts until the economy takes a downturn weighed on bullion, analysts said.

“There’s expectation for resolution of the trade war and that is the main story behind this fall in gold,” said Carlo Alberto De Casa, chief analyst at ActivTrades.

A risk-on scenario, stronger dollar and Thursday’s breakdown of the key support level of $1,480 also weighed on bullion as many traders were looking at gold in a $1,480-$1,520 trading range, De Casa said.


Gold fell below its 100-day moving average for the first time since end-May on Thursday.

Reflecting sentiment, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, dipped 0.16% to 914.38 tonnes on Thursday.

“While subdued global economic growth and low interest rates should keep gold prices elevated, positive developments for gold have now largely played out,” analysts at Capital Economics said in a note.

That's being said now we see the process which we usually name as "Buy on rumors" (although in our case it is more "sell" on rumors). Once agreement will be signed massive profit taking should happen and further direction will depend on Agreement details and degree of matching to expectations. If Agreement will be signed but it will appear to be "faltering giant" - big events will follow. But now, while investors stand in euphoria anticipating real breakthrough and prosperous future for US/China mutual trading - gold will stay under pressure.

This caution we could see in investors' positions. Take a look that despite huge drop CFTC data shows that investors do not hurry to sell-off gold and keep net long position at high levels. Thus, net long position is rising four weeks in a row. Last week we also discussed SPDR fund position. This week it has decreased but at very small value, so we could discount this decrease:

upload_2019-11-10_12-51-48.png

Source: cftc.gov
Charting by Investing.com



Technical
Monthly

Although we see that fundamental factors make mixed impact on the market - we see downside action, but at the same time long-term positions of big players stand intact - technical picture shows more significant changes.

On monthly chart gold keeps bullish context by far. MACD trend stands bullish and price action is forming tight flag consolidation right under resistance area. In general we keep 1530-1585 range as major monthly resistance here.

Butterfly pattern suggests at least 3/8 retracement, which seems solid pullback on lower time frames. It could look scaring but in reality this is normal technical reaction on achievement important target.

That's being said monthly chart keeps long term bullish tendency intact by far
gold_m_11_11_19.png


Weekly

Weekly trend stands bearish. Here we have to acknowledge confirmation of DRPO "Sell" LAL pattern. Unfortunately gold was not able to hit XOP target and form perfect shape of DRPO with approx. equal 2nd top, but starts dropping instead.

Still, we've got DRPO two closes around 3x3 DMA which let's us talk on Look-alike pattern. Here we have two support areas. First one is 1447, which is almost hit, next one is K-support area of 1362-1380. K-area is also the target suggested by monthly butterfly pattern.

Although we've suggested a bit different price shape on downside reversal (reaching XOP, forming DRPO then collapse) - result stands the same, gold starts dropping finally out from resistance area. Taking in consideration the momentum, it seems that drop should continue after technical bounce as market stands at weekly oversold and near Fib support level.

Once relief will be over - gold supposedly should continue downside action, if of course, investors' expectations on US/Sino agreement will be satisfied.

XOP target is still valid and could be reached later, if gold will keep "C" point intact.
gold_w_11_11_19.png


Daily

On daily time frame gold totally fulfilled our plan, challenging recent lows around 1458$ area. Our former upside AB-CD has been erased, as price has dropped below "C" point. Now we have to consider more extended AB-CD pattern. Price has hit its COP target. OP stands at 1421$ and coincides with 1.618 extension of butterfly pattern.

Here we also have strong support around 1447. This is 5/8 Fib level here, but also recall that we have weekly 3/8 level as well - thus, we have K-support, which is accompanied by 1.27 butterfly target as well.

Here market also stands at oversold. It means that for taking short position on daily/weekly basis we need to wait for upside retracement from K-support area. Intraday traders could try to take short positions on minor pullbacks until price has not reached 1447-1448 area and butterfly target. Once both of them will be hit - we could consider short-term long entry as well:
gold_d_11_11_19.png


Intraday

Our 4H XOP has been reached accurately right on Friday. As gold stands at oversold on daily chart - minor pullback could happen. At the same time, as major daily support cluster has not been reached yet - price will tending to it, thus, retracement should not be too significant:
gold_4h_11_11_19.png


If nothing will change in political sphere - in current circumstances retracement should not exceed 1475 area, which is K-resistance on 1H chart. Minor XOP creates an Agreement with it. We already have puny "222" Buy pattern.
gold_1h_11_11_19.png


Conclusion

While investors anticipate breakout in US/China trading agreement - gold will stay under pressure. Currently we do not see any hazard to long-term bullish tendency, big traders still keep longs on gold, but in shorter-term perspective gold supposedly should show deeper downside retracement. The same thing is suggested by monthly/weekly technical picture.
 

Sive Morten

Special Consultant to the FPA
Messages
12,710
Greetings everybody,

There are not many changes on gold market as well. Market gradually is coming lower and we are closer and closer to potential long entry here. Price already has touched K-support area. At the same time - butterfly extension stands slighly lower, in 1442-1443 area.

1.618 extension and OP target are not interesting for us now as they stand under weekly K-area and too deep under oversold level.
gold_d_12_11_19.png


On 1H chart could be formed the same pattern as on EUR - butterfly Buy. Its extension also stands around 1442 and it could let market to complete daily pattern as well. That's being said, we could use this pattern as background for long entry as well.
gold_1h_12_11_19.png


So, daily traders should do nothing and wait for upside pullback - reaction on strong support area. Intraday traders could consider long entry, according to this trading plan. If you're not patient enough, you could take position a bit earlier, but your stop should be anyway under 1440 area.
 

RogerTC

Corporal
Messages
97
SILVER

Folks, We are around good levels and i expect this market to give lots of opportunities on short and mid term.

Looking at our monthly chart. Trend is UP. Market testing and retracing back from the agreement zone around 18.00-18.50.


monthly res.PNG



On the weekly, We have F5 support at 16.70 and controlling OP together with secondary OP at 16.49/48. You can see my entry levels on the chart. First one is filled which is a SOR trade without placing a hard stop. Second one is long term trend trade which I will be looking to fade weekly sell against monthly buy at strong agreement zone. Stop level is below controlling XOP. Take profit is monthly controlling OP just above the highs at 21.30-21.40

weekly support.PNG


And the daily,

MACDP Hook on the daily gives us a breath..When you are trading SOR having the hook on chart adds confluence to our trade plan. You can see the good resistance zones on daily as well.

daily res.PNG


Finally the 4HR,

This will be our timeframe to look for take profit. Confluence at 17,22-.17.18 looks good but depending on the dynamic pressure and reactions on the resistance levels I may hold this trade until daily it reaches a daily fib node. Wash and Rinse adds confluence to trade as well.

4hr res.PNG


Please reply if you have any questions about the trade plans.

Happy trading!
 

RogerTC

Corporal
Messages
97
Thanks for the correction Sive. Yes I would write confidence instead of conluence.

Macdp Hook => When a macd predictor hook is formed it is likely that price and macdp line starts to get closer to each other at least show some reaction. That is used as a confidence builder in our SOR and MTP trade plans. Once the hook is formed you can place your stop below/above to bars low/high.

Hope that helps to clarify. I attach some more examples later.

Regards,
 

Sive Morten

Special Consultant to the FPA
Messages
12,710
Greetings everybody,

Roger provides great analysis on Silver market and what is really interesting that it has a lot of common things with gold setup as well. Here, on gold we have the same AB-CD downside action (although major OP has not been reached yet), but we're at weekly K-support + Oversold and intraday price action is very similar to silver as well.

So, on daily chart our entry setup is done. Market at K-area and shows upside bounce. Yes, 1442 level has been missed for 3$, but this is not a surprise as we warned yesterday, that it could happen, because it stands below weekly K-area. As we've said - if you're not confidence enough in catching perfect entry points - take position "somewhere around" as, in general, we are "at the point" already. Just place stop below weekly K-area at some distance:
gold_d_13_11_19.png


Minimal pullback that we should get is 1475 K-resistance area. Potentially it could be stronger because of support scale that we have:
gold_4h_13_11_19.png


Take a look - here we have similar W&R type of action as on silver market. Here we've got 1.27 butterfly at 1445 as well. If you have missed long entry there - you could keep an eye on minor pullback to do it. Now price stands at 3/8 Fib resistance on 4H chart, so, retracement is possible:
gold_1h_13_11_19.png
 

cercamon

Private, 1st Class
Messages
42
Thanks for the correction Sive. Yes I would write confidence instead of conluence.

Macdp Hook => When a macd predictor hook is formed it is likely that price and macdp line starts to get closer to each other at least show some reaction. That is used as a confidence builder in our SOR and MTP trade plans. Once the hook is formed you can place your stop below/above to bars low/high.

Hope that helps to clarify. I attach some more examples later.

Regards,
Hi RogerTC, your notes were very interesting! I couldn't find what SOR and MTP acronyms stand for. Could you clarify that?
Much appreciated!
 
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