GOLD TREND September 12-16, 2011

September 16, 2011

 

Gold support on Friday is the 1750-1770 area.................

 

The gold market was raided as the banks of England, Europe, Switzerland, Japan and USA came together to supply as many dollars as the European markets may need to remain solvent. As part of that package, it is difficult to not suspect a coordinated gold intervention by central banks is underway. Today's test of the 1772 area in spot has now reached the 34 day moving averages. Everything about the sell off looks suspicious and while this area may be support --- the more likely support in this market resides at the 1680-1700 area.

 

 

 

Gold first resistance on Friday is the 1803-1815 area.

Gold prices extended the losses on Thursday to drop below $1800 an ounce, as Germany and France assured traders that Greece will remain in the euro bloc, which boosted demand in higher yielding and more risky assets, and weighing down on gold prices. Moreover, the European Central Bank announced a coordinated effort between major central banks around the world to provide European banks with dollars through three medium term loan operations in the final three months of this year, which also boosted optimism in markets and pushed gold prices further to the downside.

The short term outlook for gold prices seems to be to the downside amid the support from the central banks around the world, while markets will be eyeing whether the Fed will provide further monetary easing next week, and if that proves to be the case, we should expect gold prices to extend the losses on rising risk appetite in markets. Nonetheless, the overall outlook for gold prices remains to the upside, since we still expect investors to target safe assets on more EU debt fears and slowing global growth.

Eongated flat correction down 1770.12

One more dip to 1781 is likely followed by a grind higher to 1815. 

After which it can resume its downtrend.

Warning: Imminent end of bearish move

 

 

September 15, 2011

 

 

The gold markets moved sideways during the Wednesday session, but more importantly have found the $1,800 level supportive still. The market is very bullish, and with all of the potential problems in Europe the gold markets should still find a “safe haven” bid. The breaking of the highs on Wednesday sends this market back to $1,900 level. If the market falls, we think that the $1,700 shall be massive support. We only buy this market, and will not sell.

In my most recent few forecasts for subscribers and public articles I've discussed a major correction in Gold, and it dropped $208 within 3 days of that forecast several weeks ago as Gold traders will recall. Last week I wrote about further consolidation being required in what I'm seeing as a either 4th wave likely 'Triangle Pattern' that will consolidate the 34 month run from $681 to $1910 into August of this year, or a 3 wave 'A B C' pattern. We are right now in some form of C wave, it's just a matter now of confirming if we are going to get a 'D and E' wave to follow, or the C wave drops lower before we bottom.

A Triangle pattern serves to let the 'economics of the security' catch up with the prior large movement upwards in price. In essence, the crowd behavior pushed the price of Gold a bit too high too fast, and this consolidation pattern lets the fundamentals catch up to price action. We had a parabolic move I discussed many weeks ago, and those always end badly to the downside. The $208 drop in three days is a typical reaction to a spike run like that. At the end of the day though, I had been forecasting what I call a 'Wave 3' top and was looking for a multi week or multi month consolidation pattern before Gold could move higher.

Let's examine what that triangle projection may look like. They take the form of 5 waves, or what we can call ABCDE in a pattern. The biggest drop is always the 'A' wave, and that was 1910 to 1702 in 3 days or less. The next biggest drop is the 'C' Wave, and that was 1920 to 1793, noting it was a Fibonacci 61.8% drop relative to the A wave. In other words, each successive wave down in the 5 wave triangle is smaller. This is due to the sentiment finally shifting and the trading patterns moving from people chasing the hot sector or stock or metal, to the long term investors accumulating the dips.

If we end up consolidating in a 'Triangle', then Gold should end up looking something like the below pattern I drew, with a target of $2,350 per ounce many months out:

The other pattern we are watching for at TMTF is the ABC Correction pattern. We had the A wave down to 1702, which corrected 50% of the move from 1480-1910 in 3 days. Rarely do you get a major move down like that and not get some type of 're-test' of that low, but because the fundamentals for Gold are strong and getting stronger, we are favoring the Triangle pattern still as most likely. With that said, there is a fat and juicy 'Gap' sitting in the chart around 1660 on Gold and dropping down there is what a lot of traders are watching. If that were to fulfill, then we will see an ABC correction ending around $1643, and then Gold will begin another multi month rally to new highs:

September 14, 2011

"There is a combination of factors that is sending gold down, predominantly the equity markets being crushed over the last few sessions and investors having to liquidate profitable metals positions to meet their margin calls in equities,"

Gold markets fell, and then rose during the Tuesday session as the gold markets found support just under the $1,800 level. The market trades more like a currency, as it is directly impacted by the situation in Europe. The gold markets are rising against all currencies, not just the US dollar, so it looks as if the uptrend is still intact, and that buying is really the only option that a trader has. We seriously cannot sell this market because the uptrend is so strong. The bounce off of $1,800 is impressive, and a break of the highs on Tuesday would be a buy signal to about the $1,900 level.

The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning bearish signalling that sideways to lower prices are possible near-term. Closes below last Wednesday's low crossing are needed to confirm that a short-term top has been posted. If it renews this year's rally into uncharted territory, upside target are hard to project. 

Gold first resistance on Wednesday is the 1843-1859

It should test 1843 - 1859 area after which a sell off down to 1804.52 or extended to 1775.26 

area is expected.

Since present economic conditions provide plenty of reasons to bullish and very few to be bearish...

round figures such as $1,800 can be useful indicators of where investors are prepared to buy back in to [gold] following a dip.

We see [ Gold Price weakness] as an opportunity for investors to buy..

We recommend Buying Gold on dips..the Gold Price's "inability to reclaim the $1900 level has shifted the focus lower in the short term..The ongoing debt/deficit crisis is likely to result in an extended period of super lax monetary conditions in the U.... gold is likely to make fresh all-time record highs before

year-end.

Gold prices continued to drop in cautious trading on Tuesday, where traders were still cautious amid speculations Greece is heading for default, while news emerged that China is in talks to purchase Italian bonds, which eased some of the concerns in markets, and pushed gold prices lower.

We still preserve our bullish outlook for gold prices, where traders are likely to continue targeting safe assets including gold amid the huge uncertainty that continues to surround the outlook for global growth, especially since emerging signs suggest global growth is slowing, and that should continue to support demand for gold as a safe haven over the coming period.

Moreover, the deepening European debt crisis should continue to provide gold prices with strong bullish momentum, and accordingly, we should expect gold prices to extend the gains over the coming period, where speculations continue to mount that Greece will default on its debts.

September 13 , 2011

 Gold first resistance on Tuesday is the 1833-1838 area... 

The USD can sometimes override the value of gold in times of fear, and we think this may be what is happening currently. With the recent double top being formed, we are looking for weakness in the gold market for the short-term, but feel that this market will more than likely continue to be a buy over the long-term. We are especially interested in a pullback that shows support between the $1,700 and $1,750 marks. We won’t sell – the gold markets have been capable at ripping to the upside at the drop of a hat, and we do not want to be on the wrong side of that trade.

September 12 , 2011

Gold Prices "should benefit from the scaling back of risk appetite on what appear to be rising
fears of a Greek default, contagion to the rest of the periphery, and the impact on banks,"

Gold had a very sharp slide in the middle of last week. It appears to have flattened in the medium term. It is in congestion, reflecting indecision. But after every period of indecision is a period of decision, and a trend to some degree. Let's see if we will have a short-term bearish trend in the context of a medium term side-ways consolidation.

• In the 1H chart, gold is spotted to be in congestion, lower highs, higher lows. It can be argued that a triangle is forming.
• The upside opens back up above 1900, at which point a retest of the 1920 high, with the 1950 target to open up if 1920 breaks for gold to record fresh record highs.
• However, if the market stays below the 200SMA in the 1H chart, and then pushes the RSI below 40 and then 30, we would have some signs of bearish intent.
• More importantly, if the market breaks below 1820, we have price action breaking out of the rising support shown in the 4H chart, which opens up some bearish outlook in the short-term first back to the 1790-1800 September low.
• The 4H chart shows a swing projection close to the 1760 area. With gold, it is probably prudent NOT to have high expectations for a strong bearish correction.
• A more conservative target might be the 1775-1786 area, just above the 200SMA towards the 61.8% retraceement level.
• With the market monitoring the Eurozone crisis, weak EUR is reflective of risk aversion.
• Gold, usually rallies in times of risk aversion because of its safe-haven status.
• Therefore, for gold to continue lower in the short-term, we probably would also see the EUR stabilize after falling from 1.4550 to 1.35.

 Gold Technical Analysis Monday September 12 , 2011

Gold markets fell on Friday as traders sold off everything they owned. The market did make a comeback later in the day, and it appears that many traders and funds were forced to liquidate their gold positions in order to cover other losses. (This happens quite often, and explains days like this, when the market is full of fear, yet gold falls. There is almost always a snap back like we had in the US session as well.) The resulting candle is a hammer, and the market looks very bullish at this point. However, this bullishness does produce whipsaw trading, and wide stops are needed. If you want to go long, it is probably the right direction, (It has been for 10 years) but be aware that the market is getting comfortable with $50 swings everyday.