Sive Morten
Special Consultant to the FPA
- Messages
- 18,760
Fundamentals
In fact, guys, on previous week we have seen the same bargain, mentioned by Obama. Particularly about this bargain he said once, that he has tired from this. As Reuters reports - U.S. House of Representatives Speaker John Boehner said on Friday the House would not vote on a spending bill without conditions to end the government shutdown, and demanded spending cuts in exchange for raising the government's debt ceiling.
The comments suggested the government shutdown would continue for a second week, or until politicians reach a deal on the U.S. debt issue. "There doesn't seem to be a lot of fear yet priced into financial markets (from the shutdown), and until there is, I don't think gold will do much," Deutsche Bank's global head of commodity research Michael Lewis said.
Continuing for a fourth day, the partial U.S. government shutdown delayed the release on Friday of non-farm payrolls data for September, although the postponement had little noticeable impact on prices.
Developments surrounding the raising of the U.S. debt ceiling would have a much greater impact on perceptions of risk, Deutsche's Lewis said. Congress must increase the country's borrowing limit by Oct. 17 or risk default.
A default could hurt U.S. growth expectations and the U.S. dollar, potentially delaying any move by the Federal Reserve to scale back its massive stimulus program which has bolstered gold prices, traders said. "It'd be difficult to be short gold in this environment. You may be afraid because of all this looming to push the sell button. You might just wait and see," a New York dealer said.
Asian demand for physical gold picked up this week, especially in Japan and Thailand, when prices fell below $1,300 an ounce, but interest waned when the market moved off the lows.
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, reported a second daily outflow on Thursday of 1.8 tonnes, suggesting investors' appetite for gold remains soft.
Also, guys on current week we also do not have CFTC report, since this is also government entity.
So, what conclusion could be made, mostly from the comments of Deutsche Bank economist? First he said, that it is not enough fear yet in gold prices. Here probably we can assume that he suggests further upward action of gold, as we will approach to 17th of October. Second, and what is most important – “it is difficult to enter short” when all this mess stands around. It looks like he would like to enter short if market would stand in normal environment, but he can’t do this due to US government turmoil. This makes me think that when or if, this mess will end positively, gold should show significant drop or even turn to downward action. This speech just confirms our thoughts that we’ve discussed in details in previous research.
Monthly
Again just few comments could be made here. October price action is too small for monthly scale, since month just has started. Interestingly that if you will draw upward AB=CD based on current small move up here, you’ll get the target right at 1550 area. I just wonder, does gold really could show such appreciation, driven by fear, closer to debt ceil dead line? Other analysis still stands the same.
It might happen that we now stand at the eve of some important events as we’ve said above and who knows, may be we will have to drastically change our view on the market soon. But right now we will continue to hold with our previous analysis suggesting that market now stands in upward retracement. September black candle is not a tragedy and even looks absolutely reasonable. Take a look, we have almost a year of consequtive drop – month by month. Previous 2 candles were the first ones up. Bearish momentum is not disappear it still on the market and presses on it, does not let market freely change sentiment. Thus, such sort of “returns” should not surprise us. All other analysis here is still the same. Current move down probably should become a part of compounded retracement up, until market will not take current lows. Only in this case we could say that bearish trend has continued.
We keep in mind Volatility breakout pattern and know that there will be 3-leg downward action. This means that current bounce will be just retracement probably. Second, currently we know that market at support – Fib support, target of rectangle breakout, completion of double harmonic swing down and monthly deep oversold. Unfortunately monthly chart does not give us much assistance in short-term trading. One bullish pattern that probably could be seen here is bullish DiNapoli “Stretch” pattern, since market stands at deep oversold right at Fib support. Target of this pattern is a middle between Oscillator Predictor Bands – right around 1550$ area. That is also the lower border of long-term consolidation after historical peak. This area agrees with “Stretch” pattern as well.
Weekly
Situation on weekly chart mostly could be treated as indecision. Once market action has taken shape on high wave pattern and price mostly stands inside its range since then. Previous week has made an attempt to show downward action, but returned right back inside the same range and stuck in 50%-61.8% Fib support area and MPS1. This confirms our thoughts that we’ve made in fundamental part of research – investors are waiting of changes and do not take fast and drastical steps. Since currently as we’ve read above, is not much fear on the market and it looks like markets have a lot of time till 17th of October still. At the same time, nobody sells, since fear still exists and risk of default is in the air already.
Speaking about previous analysis, mostly it is stands the same. It is too early to say that market has started move down again. One issue that we can add here is – price is approaching to MACDP line and on next week probably we could get a chance to see grabber. Other comments are the same - current price action is absolutely normal for reversal swing. Trend holds bullish, market stands at 50% support level and MPS1. Recent candles as we’ve said, mostly indicates indecision, since price has closed around open level. Retracement down is also reasonable, since market has hit major 0.382 Fib resistance level. Taking into consideration previous bearish power and momentum, market just can’t show light retracement, since momentum is still here and it should be fade out particularly by deep retracements. In general, we probably will say that market has re-established bearish trend only if it will take out current lows around 1170. Or if we will see some clear signs of inability to move higher.
Daily
I suppose, guys, you do not need many comments with this chart – nicely looking bearish grabber, with minimum target at 1276 lows. It is difficult to suggest right now – whether this grabber could lead to some extended move down, for example to 100% AB-CD target around 1230, but I do not see any contradiction between move to 1276 and growing fear of US default. Since till 17th of October is pretty much time, we can see as move to 1276 as rebound and upward acceleration if situation will really become hot closer to X-day.
As we’ve said in EUR research, current market is not driven by common sense. That’s why in period of turmoil is better to stick with clear short-term patterns. If they will fail or work out – wait for another one. This is just safer, because only patterns could give us target, invalidation point and risk/reward ratio simultaneously.
4-hour
Interestingly, but here we have another stop grabber, oposite to daily one. Obviously one of the should fail, or will not reach the target. As daily time is more significant, that 4-hour one, we mostly should focus on daily pattern. But look at it from a perspective of this pattern, be flexible, do not act mechanically. If, say, we will get fast acceleration up, then it will be better to not take any short positions. Conversely, any lazy and choppy upward action should be treated as retracement and confirmation that market could trigger daily bearish pattern. That’s being said, on Monday, probably it will be clear, should we take any position or not. By far market shows usual picture for gold market – it like re-test previously broken lows (and highs). Here we see, how on previous week market has re-tested broken lows and hit 5/8 resistance level.
1-hour
On hourly chart I just want to show you pivot point and our daily stop grabber swing. If we still will decide to take short position, then it should be done from one of these levels. First fib resistance coincides with WPP, next is 1317 Fib level. So, let’s see what will happen...
Conclusion:
In current turmoil we do not see much sense to discuss long-term picture. When even nearest future is unclear better to deal with simple and short-term patterns and we have one on daily chart. Let’s see how market will done with it and then will decide what to do next.
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.
In fact, guys, on previous week we have seen the same bargain, mentioned by Obama. Particularly about this bargain he said once, that he has tired from this. As Reuters reports - U.S. House of Representatives Speaker John Boehner said on Friday the House would not vote on a spending bill without conditions to end the government shutdown, and demanded spending cuts in exchange for raising the government's debt ceiling.
The comments suggested the government shutdown would continue for a second week, or until politicians reach a deal on the U.S. debt issue. "There doesn't seem to be a lot of fear yet priced into financial markets (from the shutdown), and until there is, I don't think gold will do much," Deutsche Bank's global head of commodity research Michael Lewis said.
Continuing for a fourth day, the partial U.S. government shutdown delayed the release on Friday of non-farm payrolls data for September, although the postponement had little noticeable impact on prices.
Developments surrounding the raising of the U.S. debt ceiling would have a much greater impact on perceptions of risk, Deutsche's Lewis said. Congress must increase the country's borrowing limit by Oct. 17 or risk default.
A default could hurt U.S. growth expectations and the U.S. dollar, potentially delaying any move by the Federal Reserve to scale back its massive stimulus program which has bolstered gold prices, traders said. "It'd be difficult to be short gold in this environment. You may be afraid because of all this looming to push the sell button. You might just wait and see," a New York dealer said.
Asian demand for physical gold picked up this week, especially in Japan and Thailand, when prices fell below $1,300 an ounce, but interest waned when the market moved off the lows.
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, reported a second daily outflow on Thursday of 1.8 tonnes, suggesting investors' appetite for gold remains soft.
Also, guys on current week we also do not have CFTC report, since this is also government entity.
So, what conclusion could be made, mostly from the comments of Deutsche Bank economist? First he said, that it is not enough fear yet in gold prices. Here probably we can assume that he suggests further upward action of gold, as we will approach to 17th of October. Second, and what is most important – “it is difficult to enter short” when all this mess stands around. It looks like he would like to enter short if market would stand in normal environment, but he can’t do this due to US government turmoil. This makes me think that when or if, this mess will end positively, gold should show significant drop or even turn to downward action. This speech just confirms our thoughts that we’ve discussed in details in previous research.
Monthly
Again just few comments could be made here. October price action is too small for monthly scale, since month just has started. Interestingly that if you will draw upward AB=CD based on current small move up here, you’ll get the target right at 1550 area. I just wonder, does gold really could show such appreciation, driven by fear, closer to debt ceil dead line? Other analysis still stands the same.
It might happen that we now stand at the eve of some important events as we’ve said above and who knows, may be we will have to drastically change our view on the market soon. But right now we will continue to hold with our previous analysis suggesting that market now stands in upward retracement. September black candle is not a tragedy and even looks absolutely reasonable. Take a look, we have almost a year of consequtive drop – month by month. Previous 2 candles were the first ones up. Bearish momentum is not disappear it still on the market and presses on it, does not let market freely change sentiment. Thus, such sort of “returns” should not surprise us. All other analysis here is still the same. Current move down probably should become a part of compounded retracement up, until market will not take current lows. Only in this case we could say that bearish trend has continued.
We keep in mind Volatility breakout pattern and know that there will be 3-leg downward action. This means that current bounce will be just retracement probably. Second, currently we know that market at support – Fib support, target of rectangle breakout, completion of double harmonic swing down and monthly deep oversold. Unfortunately monthly chart does not give us much assistance in short-term trading. One bullish pattern that probably could be seen here is bullish DiNapoli “Stretch” pattern, since market stands at deep oversold right at Fib support. Target of this pattern is a middle between Oscillator Predictor Bands – right around 1550$ area. That is also the lower border of long-term consolidation after historical peak. This area agrees with “Stretch” pattern as well.
Weekly
Situation on weekly chart mostly could be treated as indecision. Once market action has taken shape on high wave pattern and price mostly stands inside its range since then. Previous week has made an attempt to show downward action, but returned right back inside the same range and stuck in 50%-61.8% Fib support area and MPS1. This confirms our thoughts that we’ve made in fundamental part of research – investors are waiting of changes and do not take fast and drastical steps. Since currently as we’ve read above, is not much fear on the market and it looks like markets have a lot of time till 17th of October still. At the same time, nobody sells, since fear still exists and risk of default is in the air already.
Speaking about previous analysis, mostly it is stands the same. It is too early to say that market has started move down again. One issue that we can add here is – price is approaching to MACDP line and on next week probably we could get a chance to see grabber. Other comments are the same - current price action is absolutely normal for reversal swing. Trend holds bullish, market stands at 50% support level and MPS1. Recent candles as we’ve said, mostly indicates indecision, since price has closed around open level. Retracement down is also reasonable, since market has hit major 0.382 Fib resistance level. Taking into consideration previous bearish power and momentum, market just can’t show light retracement, since momentum is still here and it should be fade out particularly by deep retracements. In general, we probably will say that market has re-established bearish trend only if it will take out current lows around 1170. Or if we will see some clear signs of inability to move higher.
Daily
I suppose, guys, you do not need many comments with this chart – nicely looking bearish grabber, with minimum target at 1276 lows. It is difficult to suggest right now – whether this grabber could lead to some extended move down, for example to 100% AB-CD target around 1230, but I do not see any contradiction between move to 1276 and growing fear of US default. Since till 17th of October is pretty much time, we can see as move to 1276 as rebound and upward acceleration if situation will really become hot closer to X-day.
As we’ve said in EUR research, current market is not driven by common sense. That’s why in period of turmoil is better to stick with clear short-term patterns. If they will fail or work out – wait for another one. This is just safer, because only patterns could give us target, invalidation point and risk/reward ratio simultaneously.
4-hour
Interestingly, but here we have another stop grabber, oposite to daily one. Obviously one of the should fail, or will not reach the target. As daily time is more significant, that 4-hour one, we mostly should focus on daily pattern. But look at it from a perspective of this pattern, be flexible, do not act mechanically. If, say, we will get fast acceleration up, then it will be better to not take any short positions. Conversely, any lazy and choppy upward action should be treated as retracement and confirmation that market could trigger daily bearish pattern. That’s being said, on Monday, probably it will be clear, should we take any position or not. By far market shows usual picture for gold market – it like re-test previously broken lows (and highs). Here we see, how on previous week market has re-tested broken lows and hit 5/8 resistance level.
1-hour
On hourly chart I just want to show you pivot point and our daily stop grabber swing. If we still will decide to take short position, then it should be done from one of these levels. First fib resistance coincides with WPP, next is 1317 Fib level. So, let’s see what will happen...
Conclusion:
In current turmoil we do not see much sense to discuss long-term picture. When even nearest future is unclear better to deal with simple and short-term patterns and we have one on daily chart. Let’s see how market will done with it and then will decide what to do next.
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.
