Sive Morten
Special Consultant to the FPA
- Messages
- 18,754
Fundamentals
As we’ve warned on Friday, that it is better to not have any position if you do not see any good patterns, gold shows nice jump up on weaker than expected NFP data that increases confusions over when the Federal Reserve will start paring back its massive bond-buying stimulus. Despite Friday's rally, gold ended the week 0.5 percent lower for a second consecutive weekly loss as its safe-haven appeal dropped on a lack of progress about possible U.S. military strikes against Syria. The disappointing report complicates the Fed's decision on whether to scale back its monetary stimulus later this month, as the U.S. central bank is set to deliver its next policy statement on Sept. 18. By Reuters news the worse-than-expected U.S. jobs data suggests that tapering of the Fed's $85 billion monthly bond-purchases, known as quantitative easing, could be pushed back further than had previously been expected, said Mitsui Precious Metals analyst David Jollie. The Fed should begin reducing monthly bond purchases at a meeting later this month in order to set monetary policy on a course for "gradual and predictable" normalization, Kansas City Fed President Esther George, a top U.S. central banker, said on Friday.
CFTC data shows the same picture as on previous week – flat open interest and growing net long speculative position. On “reasonable” market it could mean that downward retracement is possible. But now, with Syria turmoil, it could mean that market just waits something.
Sometimes it also happens in the points of trend changing. As previous swing up was just initial move up (reversal swing) after long-term bearish action, some solid retracement down is possible on gold. SPDR Fund data also does not shed more light on the picture since it again has shown 2 tonnes contraction.
Past week probably has added more uncertainty rather than clarification. Investors probably will hope on September 18th FOMC meeting that it could break at least some understanding what will be with QE program. On external affairs, Congress probably will approve strike on Syria but nobody knows what will happen next. Thus, major impact on the markets will come from Syria respond and what will happen after strike. If any negative surprises will come – gold will start to move higher again.
Monthly
As september range looks shy yet, august candle has become the second month of upward action on gold market. Still 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. Thus, this is not the time to take long-term short position, but time to think about their close and searching for bullish patterns on lower time frames – weekly and daily. 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. S&P analyst specifies approximately the same target. This area agrees with “Stretch” pattern as well.
Weekly
As you can see weekly chart, in fact confirms what we’ve said in fundamental part. Market mostly stands indecision and recent doji pattern confirms it. In fact price range within previous couple of weeks smaller than usual one. This also could be an indication of indecision.
The rest of analysis is the same. Trend is bullish here. Previously we’ve said that on August price has passed through MPR1 and this could be the sign of possible further upward continuation, as well as the fact of creation of reversal swing.
The backside of all this stuff is possible deep retracement. This happens quite often when initial reverse swing is done, since downward momentum is still strong and it just does not let market freely continue move up. CFTC data also points on this probability. As situation around Syria shows some relief, at least until 9th of September, gold also will loose some support that previously was granted by geopolitical turmoil. All together these factors could lead to retracement down. We know that gold market likes 5/8 retracement and that really could be so.
Speaking about most unwelcome bullish scenario, if market will take out current lows around 1170 that probably will destroy bullish context and let us talk about re-establishing of long-term bear trend. Unfortunately weekly chart does not let us to say more, since you see this by yourself probably – we do not have any new clues or patterns here.
Daily
As with EUR, here we have something. Although trend holds bearish here, but I still can’t drop out of my mind the fact that market has not quite hit the 1440 target. That’s why I’m trying to be sensitive to any signs of possible upward action. It does not mean that I see them in any price action, but just try to be careful to them if I see any. So, here probably everybody can see them. We have excellent bullish engulfing pattern right at Agreement area. Second moment – market has tested MPP and jump up.
Anyway, if even you do not have bullish opinion or even would like to take short position you can’t ignore bullish engulfing. It means that until its low will hold pattern will be valid and it could put foundation for small or great move to upside. Minimum target of this pattern is the length of the bars. You probably know that.
That’s being said – market at support and market has formed bullish pattern. We know minimum target and invalidation point. Hence our short term strategy is to try to trade this one.
4-hour
Well guys, 4-hour chart does not shed more light on the picture, but here you can see some details. First is – our just perfect AB=CD (recall what we’ve talked on Friday). Trend has turned bullish here and take a look – market has returned right back above previous consolidation. In general, at least now, picture looks nice from bullish point of view.
1-hour
Ok, Here we see that trend has turned bullish as well, but market has reached 5/8 Fib resustance. Our working swing is most recent thrust up. Also take a look – by this solid upward candle market has formed bullish stop grabber as well, that theoretically should lead market above previous 1400 highs. So, our task here is to take long position on some retracement inside the body of daily engulfing pattern, i.e. our working swing. There are 2 levels to watch for – 1380 and 1372. Currently is impossible to say how market could start retracement down, so watch for any patterns on lower time frames that could help you better estimate possible retracement level.
As I’ve said in EUR research currently market are indecisive and nervous, some surprises could come in the beginning of the week, so follow the common sense and do not be too stubborn with following our plan when you see really opposite signs. For example miserable plunge down or something of that sort. We do not want to get it when intend to go long. I hope you understand what I mean.
Conclusion:
Technically and fundamentally gold market stands in long-term bearish motion, but there are more and more factors start to appear that make downward action as not as cloudless as it was recently. Also we’ve got VOB pattern that gives us forecast for long-term price behavior and promise compounded downward move in shape of some AB-CD.
Fundamentally some supportive factors have appeared, and this could shift to greater retracement up. On passed week market again has given us a confirmation of this thought. Currently we have reasons as technical as fundamental to suggest that this could be upward retracement on long term charts, since market has moved above MPR1&2 on August and completed reversal swing up.
Hopefully we have clear bullish pattern on daily and will try to use it right in the beginning of the week. Then we will see what happen 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.
As we’ve warned on Friday, that it is better to not have any position if you do not see any good patterns, gold shows nice jump up on weaker than expected NFP data that increases confusions over when the Federal Reserve will start paring back its massive bond-buying stimulus. Despite Friday's rally, gold ended the week 0.5 percent lower for a second consecutive weekly loss as its safe-haven appeal dropped on a lack of progress about possible U.S. military strikes against Syria. The disappointing report complicates the Fed's decision on whether to scale back its monetary stimulus later this month, as the U.S. central bank is set to deliver its next policy statement on Sept. 18. By Reuters news the worse-than-expected U.S. jobs data suggests that tapering of the Fed's $85 billion monthly bond-purchases, known as quantitative easing, could be pushed back further than had previously been expected, said Mitsui Precious Metals analyst David Jollie. The Fed should begin reducing monthly bond purchases at a meeting later this month in order to set monetary policy on a course for "gradual and predictable" normalization, Kansas City Fed President Esther George, a top U.S. central banker, said on Friday.
CFTC data shows the same picture as on previous week – flat open interest and growing net long speculative position. On “reasonable” market it could mean that downward retracement is possible. But now, with Syria turmoil, it could mean that market just waits something.
Sometimes it also happens in the points of trend changing. As previous swing up was just initial move up (reversal swing) after long-term bearish action, some solid retracement down is possible on gold. SPDR Fund data also does not shed more light on the picture since it again has shown 2 tonnes contraction.
Monthly
As september range looks shy yet, august candle has become the second month of upward action on gold market. Still we keep in mind Volatility breakout pattern and know that there will be 3-leg downward action. This means that current bounce will be just retracement probably. Second, currently we know that market at support – Fib support, target of rectangle breakout, completion of double harmonic swing down and monthly deep oversold. Unfortunately monthly chart does not give us much assistance in short-term trading. One bullish pattern that probably could be seen here is bullish DiNapoli “Stretch” pattern, since market stands at deep oversold right at Fib support. Thus, this is not the time to take long-term short position, but time to think about their close and searching for bullish patterns on lower time frames – weekly and daily. Target of this pattern is a middle between Oscillator Predictor Bands – right around 1550$ area. That is also the lower border of long-term consolidation after historical peak. S&P analyst specifies approximately the same target. This area agrees with “Stretch” pattern as well.
Weekly
As you can see weekly chart, in fact confirms what we’ve said in fundamental part. Market mostly stands indecision and recent doji pattern confirms it. In fact price range within previous couple of weeks smaller than usual one. This also could be an indication of indecision.
The rest of analysis is the same. Trend is bullish here. Previously we’ve said that on August price has passed through MPR1 and this could be the sign of possible further upward continuation, as well as the fact of creation of reversal swing.
The backside of all this stuff is possible deep retracement. This happens quite often when initial reverse swing is done, since downward momentum is still strong and it just does not let market freely continue move up. CFTC data also points on this probability. As situation around Syria shows some relief, at least until 9th of September, gold also will loose some support that previously was granted by geopolitical turmoil. All together these factors could lead to retracement down. We know that gold market likes 5/8 retracement and that really could be so.
Speaking about most unwelcome bullish scenario, if market will take out current lows around 1170 that probably will destroy bullish context and let us talk about re-establishing of long-term bear trend. Unfortunately weekly chart does not let us to say more, since you see this by yourself probably – we do not have any new clues or patterns here.
Daily
As with EUR, here we have something. Although trend holds bearish here, but I still can’t drop out of my mind the fact that market has not quite hit the 1440 target. That’s why I’m trying to be sensitive to any signs of possible upward action. It does not mean that I see them in any price action, but just try to be careful to them if I see any. So, here probably everybody can see them. We have excellent bullish engulfing pattern right at Agreement area. Second moment – market has tested MPP and jump up.
Anyway, if even you do not have bullish opinion or even would like to take short position you can’t ignore bullish engulfing. It means that until its low will hold pattern will be valid and it could put foundation for small or great move to upside. Minimum target of this pattern is the length of the bars. You probably know that.
That’s being said – market at support and market has formed bullish pattern. We know minimum target and invalidation point. Hence our short term strategy is to try to trade this one.
4-hour
Well guys, 4-hour chart does not shed more light on the picture, but here you can see some details. First is – our just perfect AB=CD (recall what we’ve talked on Friday). Trend has turned bullish here and take a look – market has returned right back above previous consolidation. In general, at least now, picture looks nice from bullish point of view.
1-hour
Ok, Here we see that trend has turned bullish as well, but market has reached 5/8 Fib resustance. Our working swing is most recent thrust up. Also take a look – by this solid upward candle market has formed bullish stop grabber as well, that theoretically should lead market above previous 1400 highs. So, our task here is to take long position on some retracement inside the body of daily engulfing pattern, i.e. our working swing. There are 2 levels to watch for – 1380 and 1372. Currently is impossible to say how market could start retracement down, so watch for any patterns on lower time frames that could help you better estimate possible retracement level.
As I’ve said in EUR research currently market are indecisive and nervous, some surprises could come in the beginning of the week, so follow the common sense and do not be too stubborn with following our plan when you see really opposite signs. For example miserable plunge down or something of that sort. We do not want to get it when intend to go long. I hope you understand what I mean.
Conclusion:
Technically and fundamentally gold market stands in long-term bearish motion, but there are more and more factors start to appear that make downward action as not as cloudless as it was recently. Also we’ve got VOB pattern that gives us forecast for long-term price behavior and promise compounded downward move in shape of some AB-CD.
Fundamentally some supportive factors have appeared, and this could shift to greater retracement up. On passed week market again has given us a confirmation of this thought. Currently we have reasons as technical as fundamental to suggest that this could be upward retracement on long term charts, since market has moved above MPR1&2 on August and completed reversal swing up.
Hopefully we have clear bullish pattern on daily and will try to use it right in the beginning of the week. Then we will see what happen 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.
