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Gold GOLD PRO WEEKLY, September 02 - 06, 2019

Discussion in 'Sive Morten- Currencies, Gold, Bitcoin Daily Video' started by Sive Morten, Sep 1, 2019.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    This week we do not have new driving factors for gold market, action was relatively narrow, as gold was struggling overbought condition for the whole week, but overbought wins and gold turns to deeper retracement.

    Reuters reports that gold prices fell on Friday on a slight recovery in equities markets and Treasury yields but was on track for a fourth-straight monthly gain as fears of a global recession and uncertainty on U.S.-China trade relations drove investors to safe havens.

    The market is awaiting news on the trade front, said Suki Cooper, precious metals analyst at Standard Chartered Bank.

    “At the moment, gold market is focused on impact in terms of global growth and whether we’ll continue to see central banks around the world easing monetary policy,” Cooper added.

    Chinese and U.S. trade negotiating teams are maintaining effective communication, a day after both sides discussed the next round of in-person negotiations in September, China’s foreign ministry said on Friday.

    On Thursday, China’s commerce ministry said a September round of meetings was being discussed by the two sides, but added it was important for Washington to cancel a tariff increase.

    Positive signs on the trade front also lifted world stocks to a one-week high, limiting bullion’s upside.

    “Gold will have a very high beta to any reduction in trade tensions given that they have driven so much of its rally,” OANDA analyst Jeffrey Halley wrote in a note.

    Escalation in the trade war between the world’s biggest economies and heightened fears over a global downturn contributed to a rise of more than $100 for gold in August.

    A recent inversion of the U.S. yield curve, where short-dated yields are running above long-dated ones, has also unsettled investors as it often precedes a recession.

    Meanwhile, the U.S. Federal Reserve and the European Central bank are widely expected to cut rates next month to stimulate their economies.

    CFTC data shows that net long speculative position still stands near the top. It means that current action has not triggered yet massive profit taking and investors treat this pullback as short-term

    upload_2019-9-1_13-29-4.
    Source: cftc.gov
    Charting by Investing.com

    As the economy slows and the proportion of loss-making firms rises, China reformed one of its lending rates — the Loan Prime Rate (LPR) — earlier this month. The new LPR is based on the average of 18 banks’ submissions, excluding the highest and lowest. These submissions are to be based on “adding a few basis points to the interest rate of open market operations (mainly referring to the rate of the medium-term lending facility).” The PBoC stipulated that new bank loans should be priced in line with the LPR to help push borrowing costs down towards the medium-term lending facility rate. This will shift the blue line closer to the orange line in the chart below, as borrowers gain access to loan rates which more closely reflect the funding conditions of the banking system, regardless of their creditworthiness. This is just one tactic, among many, that China is using to combat the impact of Donald Trump’s trade tariffs.

    [​IMG]

    Technical
    Monthly

    Gold market starts confirmation of our major resistance area showing inability to break it immediately.

    Area of major 5/8 Fib resistance level at 1585 and monthly Overbought, accompanied by butterfly extension create solid barrier on a way up. Thus, although XOP target probably will be reached some day, but now odds suggest retracement.

    Thus, we still keep this area - 1530-1585 as tactical ceil at current moment and expect that gold will show healthy retracement out there by fundamental reasons that we've mentioned.

    Butterfly target has been hit relatively fast. Pattern itself suggests 3/8 retracement as minimal target. Hardly butterfly will fail as it is accompanied by Overbought and major Fib resistance level.

    gold_m_02_09_19.

    Weekly

    Last week we've mentioned two other extensions that stand in the same monthly area. This is larger AB-CD and minor ab-cd patterns. Both of them have XOPs in the same area - 1555-1570, which agrees with our monthly range.

    Gold was able to hit major XOP, while keeps minor one intact. Although we see started pullback down, out from major XOP - it doesn't lead to appearing of clear patterns yet. The only pattern that we could mention here is DiNapoli bearish "Kibby trade" as combination of overbought and major extension target. This pattern suggests retracement on daily chart, but it is not necessary that it should be deep, as it works in the same manner as "Stretch" pattern - combination of overbought and Fib level.

    Thus, we need to keep an eye on patterns on lower time frame. Moderate retracement on monthly/weekly chart has to have solid background and clear strong reversal patterns on daily. If we will get nothing of this kind - it could mean that gold tends to go higher again.
    gold_w_02_09_19.

    Daily

    On daily chart we indeed have some bearish signs, but they are not strong enough yet for position taking. Thus, our bearish divergence finally has been confirmed as trend has turned bearish, price drops back in High Wave pattern's range, market has formed minor reversal session on top and theoretically price could drop to 1495 area - daily oversold and nearest 3/8 Fib support level.

    The thing that makes situation uneasy is too slow downside action. It is easy to recognize here potential H&S pattern and theoretically, we could take position now trying to anticipate drop to 1495, but with slow action, I would suggest it is better to sell on the right arm's top when head will be in place already. Because slow action keeps door open for upside continuation and it is more risky to sell now, despite better price level. For example, market could form 3-Drive "Sell" instead, trying to reach final weekly XOP target.
    gold_d_02_09_19.

    Intraday

    On intraday charts action mostly is based on recent butterfly that has been completed in the beginning of the week. In fact, you could recognize two pattern, as right wing of large butterfly is another smaller 1.618 butterfly as well. Anyway, downside action is started and it takes the shape of AB-CD pattern, which is "222" Buy.
    gold_4h_02_09_19.

    Right now it is unclear yet where downside action could stop. Now it stands at K-support area which was not broken, OP target and take a look - has formed minor butterfly "Buy" pattern, while on Friday morning it was just the bearish flag, as we've mentioned it.

    gold_1h_02_09_19.

    Of course, we could talk on some trading here, but everyone who intends to trade gold market on intraday charts has to understand the risk. Trading right now cares more risk as market stands in reaction on overbought, but at the same time, this reaction is not strong enough and upside action could continue at any time. Safer way is to wait for big pattern on daily chart. If you want to trade anyway right now - try to stick with some patterns, at least. For example, here, on 1H chart this is bullish setup that lets to place very tight stop just below 1516 area. At least it cares very small, limited risk potential.

    Conclusion

    Fundamental and long-term technical analysis shows that gold keeps long-term bullish sentiment, but odds on moderate retracement becomes greater day by day.


    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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  2. JOELIBOK

    JOELIBOK Private

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    Hi Sive, Always great analysis . well done.
     
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  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    On gold market we do not have significant activity. Market mostly is forming inside sessions. As we've talked on weekend - it is not time yet to take position on daily chart, as market makes no decisions yet on further direction.

    Indirectly, as price stands close to the top and doesn't show any downside acceleration points on possible upside continuation. As a result, gold could form 3-Drive "Sell" on daily chart as we discussed in our weekly report:
    gold_d_03_09_19.

    On 4H chart market keeps well around K-support area, but price action looks too choppy to call it as upside trend continuation. Currently it mostly reminds retracement after previous drop:
    gold_4h_03_09_19.

    Although it is not very comfortable but it is possible to trade gold - just follow the patterns. One of them we've pointed in weekly report, this is butterfly, but it has worked out right on Monday. Next was "222' Buy and now we have a kind of diamond consolidation with few upside targets. This setup is valid until gold holds its lows intact. Here we could even recognize a kind of choppy reverse H&S pattern...
    gold_1h_03_09_19.
     
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  4. ED SCHAFFER

    ED SCHAFFER Private, 1st Class

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    That is absolutely right Sive, it is indeed possible to trade XAU / GOLD even in this market. For example, my specialty is intraday swing momentum trading but I like to follow your longer term work to gain "perspective" on the three markets which you cover including XAU. The longer term moves by necessity have significant influence at times over the intraday moves. I really don't care much as to why intraday moves are occurring so long as they are on the move & intraday traders can then jump in on them to capture a good chunk of the swing move. Intraday trading is definitely my preferred "cup of tea". I realize that most traders who are regularly visiting your website do trade more longer term than I do, but I believe your form of analysis on this website is applicable & has benefit for all traders including intraday traders like me. I do appreciate your hard work here on this website. So please do keep up the great analytical work you are doing for us all Sive & a great big THANK YOU to you Sive for all of your hard work!
     
    #4 ED SCHAFFER, Sep 3, 2019
    Last edited: Sep 3, 2019
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    As Gold has shown nice performance yesterday, we finally could return to our idea of 3-Drive "sell pattern here.
    It's target stands around 1565-1570 area and now we watch for final part of it - 3rd drive. It seems that it also could take the shape of butterfly "Sell". In fact it is very often happens when 3-Drive looks like two side-by-side butterflies.
    gold_d_04_09_19.

    On 4H chart our "222" Buy worked nice as price was able to hold above K-support area.
    gold_4h_04_09_19.

    Once 1H XOP target has been hit, gold turns to downside retracement. There are two accelptable areas for that. First one is K-level around 1.1537, where price stands right now, second one - major 5/8 Fib support and XOP Agreement around 1530. To keep bullish context, market has to try to hold above one of these levels. Drop below 1530 is not welcome. In this case we should not take any long positions as this drop put under question upside reversal.
    In video we've talked on few patterns around K-area on 15-min chart, so that price could slightly penetrate the K-area to complete 1535 extension targets, but it doesn't mean that it is broken. Only if market will go further below 1532-1533 - that will be breakout gold_1h_04_09_19. .
     
  6. Lolly Tripathy

    Lolly Tripathy Sergeant Major

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    4hr gold
    upload_2019-9-4_14-12-30.

    daily time frame
    upload_2019-9-4_14-14-43.
     
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  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    On daily chart we do not have big changes as market still keeps the shape of 3-Drive pattern. Yesterday we've got another bearish grabber here, but, as it was previously, it is not the fact that it will work. Still, we need to be careful to any bearish signs that we have on intraday chart.

    In general our yesterday setup has worked well, as gold has shown the rally right from our 1535 K-support area, that we've mentioned. Still, this rally was mostly emotional on geopolitical background of HK unrest relief, Brexit voting and C. Lagarde statement. All of them have decreased geopolitical tension and reduce demand for safe haven USD, JPY. As we're coming to NFP release tomorrow and EU GDP data - investors could take profit and start closing of short-term longs.
    gold_d_05_09_19.

    Indeed, currently we see significant volatility due emotions and a bit nervousness. As a result, upside rally was very short-lived and turns in opposite direction very soon, forming divergence and W&R of previous top.

    This is the reason why we do not consider new longs right now, as market has to form some bullish patterns and reach some significant support first. Downside action stands a bit fast:
    gold_4h_05_09_19.

    Thus, the first area that we keep an eye on is 1530-1535 K-support and Agreement. Here, by the way, we also could recognize potential H&S pattern and right arm should start right there. It makes long entry at this level relatively safe. Because, we should get upside bounce, at least, to move stops to breakeven.
    gold_1h_05_09_19.
     
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Greetings everybody,

    Although we've got good action on gold yesterday - today we can't do a lot of things here. Recent collapse is important for us, because it could be first step of the second stage in our long-term trading plan. First stage was reaching of major monthly target at 1530. Second is major retracement. If market will close at current level - we will get reversal week and it means something.

    In current situation it is not very comfortable to buy, at least here, on daily, despite that market stands at oversold.
    gold_d_06_09_19.

    On 4H chart gold now stands at 5/8 Fib support and WPS1. So, theoretically we have DiNapoli "Stretch" pattern, which should trigger some upside retracement. If you intend to trade it - try to set nearstanding targets, do not marry positions in current situation:
    gold_4h_06_09_19.

    On 1H chart we correctly suggested drop yesterday, but it has exceeded all our expectations. Now we should talk not on retracement (as our daily 3-Drive vanished), but maybe on trend change to bearish.

    Another reason why it is not comfortable to buy is Double Top pattern here, which has not reached the target yet of 1486 area. It means that any pullback could be weak and muted.
    gold_1h_06_09_19.

    Thus, it is not good area to sell, as Gold stands at oversold, and it is risky to buy, but possible with short-term targets...
     
  9. ED SCHAFFER

    ED SCHAFFER Private, 1st Class

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    My many years of past trading experience tells me that the "BIG BOYS" who really do control & even manipulate the markets in the short term, meaning several days out to just a week or two or so, are now pulling their old familiar well established trick of closing a short term weak tradeable market on or close to the lows of the week on a Friday close basis. This practice scares the daylights out of the longs & it is their plan to do exactly that! I fully expect them to open trading in Asia on Sunday evening with a weak open that may also hit new swing lows for the move either on Sunday or Monday. Then sometime during the European session, on either Monday or possibly even Tuesday, they will smartly begin to move the XAU / GOLD price back upwards after accumulating very heavy net long positions on Sunday & Monday but maybe also on Tuesday. Then in the ensuing week or two, at least sometime before month end at the latest, they will certainly make a stab at the old highs. Time will tell if it succeeds or not as Sive has noted already as XAU may well be making a long term or significant top in the $1,500 plus area. Watch out below for the long term. Forewarned is forearmed by both Sive & now me as well. Cheerio.
     
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