GOLD TREND Feb 20 - 24, 2012

Feb 24

Long Term=Up
Medium Term=Up
Intermediate Term=bullish

Recap and Overview

Gold rose again on Thursday as markets were just too strong for gold to pullback after taking out the key 1767 area on Wednesday. Traders who are looking to add on pullbacks will have best opportunity next week in the 1750-1765 area.

The cycle “window” is closed and any new high next week favors the Big “W” pattern to continue.

Long Term – Up

Price has reached the long term middle green channel line.  This line is the final long term resistance point before 1900-2100. A MONTHLY close above this line (give a little leeway for price penetration) will favor the correction is over.

The trend is up, and this test is big.  Watch for 1804-1838 as the monthly resistance number for the green channel line.

Here’s the other factor.  If there is to be a peak in gold and a seasonal pullback, odds favor the most likely place will be this trend line.  One scenario is we get a move above the line and then the seasonal becomes a pullback to touch this line in March. If we rally next week, that will become our new scenario in regards to the seasonal pullback.  Until then, as stated last night, we’ll keep the seasonal in mind, but will favor higher prices until they at least begin to weaken. The trends are all up, but we need to watch this area closely. Since this is the last long term resistance until last year’s highs, the shorts might try and build one final defensive attempt to hold off price here.  Obviously, if you have a lot of profit and have been waiting for a place to take some profit, this area is one you could consider.  Again, that’s if you’ve been “looking for a booking”, this is a good area to trim back.  IF WE HAVE A MONTHLY CLOSE above this area, it will favor new highs in 2012.

Intermediate Trend

Moving Average Trend – BULLISH (since 159.95)
SUPPORT (168.12-168.82) Close on Wednesday 173.03
Trend

The Unbiased moving average trend remains up.  The final resistance areas in GLD and GOLD have arrived.  With the price strength, we have to favor the trend at the moment, but this is the big one for GLD and gold. A move above these final lines favors a test of the old highs as next resistance. The green channel line resides at the 174-176 area (1790-1810 spot) and is resistance going into Friday.

Swing Traders

 If you’re long, it takes a close below (168.12-168.82) to favor a neutral reading.  This price area also need be watched.  The trend remains up.  Resistance is this area at the 174-177 zones. If you’re looking for an exit or some profit taking, this is the place to make the decision.

Short Term (cycles)

Price is up against important GANN trend lines as it arrives just under 1800.  Because of the position of price in such a long term wave point, the moves developing (or ending) are very important. The cycle window is closed, and any new high next week favors higher into March. Resistance for Friday is the 1804-1815 area at the Gann lines. IF those areas were to let go, then the 1838 area will come into focus.  These lines should provide resistance on Friday.

There was a Bradley turn date and a Delta Cycle short term date due today. Can these cycles turn the trend down or can we be peaking here? If we make a new high next week, odds will favor higher. So we need to see that. There is no doubt we are at some of the most important resistance there is. The answer is yes, we can have a top.

What Next?

Fridays are usually more favorable to the upside but price is hitting up against resistance. The one thing that has held thru is that the “price pattern” has been impulsive (bullish) looking and they continue to do so.  We have to favor higher until …….well………and this will sound foolish to you maybe...  but we have to favor higher until it stops doing so.

Regardless of whether we pullback or not on Friday, the trend is up. If anything, any pullback next week should be a buying opportunity for those looking to add.  There should be some attempt at 1760 next week, and I say should because of the continued IMPULSIVE looking price pattern we’ve been discussing. That big “W” pattern is still in play and with a 70 dollar up week; it’s hard to argue with it.

Bottom Line

Look for the 1790-1804 as First resistance on Friday and support at 1761-1767. We may consolidate or even pullback on Friday, but the trend is still up and we have to continue to favor a higher price.  Price is at major resistance on the channel lines and after a couple of big days this week; it’s possible we spend a few days range bound in the --1761-1767 to the 1790-1804 zone. Until we see weakness, the trend remains up.

GOLD after having finally smashed through resistance at $1,765 earlier in the week, gold traded in a $1,772 to $1,788 range overnight. The break out higher we had expected after the finalisation of details surrounding the second Greek bailout occurred as investors in gold moved back from the sidelines to initiate new positions in the markets. Now that another EU summit has come and gone without much changing, the buyers have re-emerged from their hibernation, without the distraction of political power plays and the verbal duels of European policymakers. For now anyway. The rise in gold prices is a reflection of continued uncertainty in global economic growth as investors continue to seek the metal for its safe haven status. For today we may see some weakness back to support at $1,765 before a resumption of the uptrend . We don't expect much volatility today and expect a range of $1,765 to $1,785

Gold is currently bullish however only to the point of 1790-1800. Watch the solid black line, as long as gold does not cross that line, we are still overall bullish! The greek crisis is keeping gold up, 
However something that goes up too fast too quickly might tend to drop just as fast.


Economic Events: (GMT)

07:00     EUR      German GDP (QoQ)      -0.2%      -0.2%
Gross Domestic Product (GDP) is the broadest measure of economic activity and is a key indicator of economic health. The quarterly percent changes in GDP show the growth rate of the economy as a whole.
09:30     GBP      Business Investment (QoQ)     -0.4%     0.3%
Business Investment measures the change in the total inflation-adjusted value of capital expenditure made by companies in the private sector.
09:30     GBP      GDP (QoQ)      -0.2%      -0.2%
Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.
14:55     USD     Michigan Consumer Sentiment      72.5      72.5
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions. There are two versions of this data released two weeks apart, preliminary and revised. The preliminary data tends to have a greater impact. The reading is compiled from a survey of around 500 consumers.
15:00     USD       New Home Sales      315K      307K
New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated.
15:00     CAD      BoC Gov Carney Speaks
Bank of Canada (BOC) Governor Mark Carney (February 2008 – February 2015) is to speak. As head of the BOC’s Governing Council, which controls key short term interest rates, Carney has more influence over the Canadian dollar’s value than any other person. Traders scrutinize his public engagements for clues regarding future monetary policy.


Feb 23

Long Term=Up
Medium Term=Up
Intermediate Term=Up
The North American Winter seasonal high could begin either this week or the week of March 7th. One of those two time periods is the most likely. UNTIL we see price weakness, favor higher, but we’re watching for this event. We just want to be aware of the potential for now. Price is now above 1767, and 1804 looks to be the last monthly hurdle.
Short Term =Up.
  The short term cycle “window” closes after the Thursday trade. Any move next week above this week’s high favors the trend up to remain in place until March.

Support and Resistance for Thursday
Initial Resistance for 1763-1773 and 2nd tier 1788-1796
Initial Support 1743-1753 and 2nd tier 1715-1725
Last night’s update resistance was listed at 1763-1773 and the high was 1781---Support was listed at 1743-1753 and the low was 1749 (all prices spot Forex).

Recap and Overview

Gold rose again on Wednesday and full filled the mid week Wednesday high for the week.  Since price is strong, Thursday’s usual pullback might be shallow.  With the December high of 1767 taken out, the monthly charts will now take on a new look. There’s only the post high at 1804 remaining and the bull market will be back in gear. But let’s not get too jovial just yet.

The one thing that has been consistent is that gold rallies on bailout news and corrects any time there is even a hint of default.  The Greek thing is only Baltic Ave on the Monopoly game board and there’s still a long way to go. The initial interpretation is that not only is it bailout for this current bond payment, but there’s lots more where that came from. 

 "The [Greek] deal may have removed near-term uncertainty," adds Helen Roberts, head of government bonds at F&C Asset Management in London, "[but] it's a hard environment to implement austerity measures. It's a worry that the Greek government might not be able to do much even though they are fully committed to the agreement."

"The greatest risk to the downside that we see for gold is a fresh Greek crisis," warns HSBC precious metals analyst James Steel. (Only if it’s a default and a contagion for cash spreads–Bill)

Here in London, two members of the Bank of England's Monetary Policy Committee voted against its decision to expand its quantitative easing program by £50 billion earlier this month, while the remaining seven voted in favor, minutes published Wednesday show.

David Miles and Adam Posen both voted in favor of a larger increase of £75 billion, which would have taken the total size of asset purchases to £350 billion.

"This leaves the door open for more QE," reckons Victoria Cadman, London-based economist at Investec.

"We're looking for another £50 billion in May, and after that we don't see any more as the economy picks up in the second half [of 2012]."

Short Term (cycles)

Gold did what it had to do as it roared into mid week Wednesday, gave us the new high for the week and exceeded 1767.  Of greater importance is that the pattern we’ve been watching build up, the big “W” is gaining credibility and fast.

We now have another “major” clue on the daily page that suggests higher price and that is a long range day.  We now have two of them in a row.  This action might be what we are about to see in SILVER as the options expiration is on Thursday.  In any event, a long range day inside a new price discovery area is important because the impulse pattern we are following continues to now EXPAND in velocity.  Tuesday’s long range day was in lieu of price moving above the 1744 area and now Wednesday’s long range day was due to December being taken out.  This is bringing on a new slew of buying as all the other non bank shorts are moving back to the long side.

Once 1760 gave way on Wednesday, the control boyz had to abandon 1767.  The second long range day caught them off guard and all they could do was move along with the upside as they now scramble to set up shop at the next resistance zone.  They are down to just a few spots left. Today’s high was right in the Gann intersection lines that are above the green arc. If price breaks above 1800, there isn’t any resistance up until 1840 and then 1875 on the daily chart. 

What Next?

The strength of the impulse look carried us over the first key resistance. Thursday’s are usually pullback days.  With this type of strength, and the price area’s we have broken, it’s possible we can move to 1800-1825 before we pause. First support is 1761-1766. The SWISS FRANC is also ready to break out higher on its charts, if it does, it’s more spark for gold.  We might consolidate the gains on Thursday but the trend is up, and we continue to favor higher.

Bottom Line

Look for the 1790-1804 as resistance on Thursday and support at 1761-1767. We may consolidate on Thursday, but the trend is up until we see weakness, we favor higher with the “big” W trend in motion.

Early Thursday mornings are usually accompanied by some type of pullback.
IF so, in gold then 1761-1767 is initial support for traders with much stronger support at 1744-1755. 

For those thinking of shorting --

Gold is skyrocketing up at the close of the session. Trading at this writing at 1772.65 a new recent high. Gold had fallen earlier in the day from a rally that took prices to a two-week high, as some of the optimism from the Greek deal faded after downbeat data from China, and with investors taking profits given recent gains for the metal. As the day drew to an end gold was trading down 60 cents at 1758.10, when it turned and surged up.
Continued worries over Greece still unnerved the markets. Many have the morning after regrets.

Sales of U.S. existing homes rose 4.3% in January and inventories fell to nearly seven-year lows, as lower prices, unusually warm weather and an improving economy all lifted demand.

The National Association of Realtors said Wednesday that January sales were at a seasonally adjusted annual rate of 4.57 million, compared to economist forecast of 4.7 million. Sales rose in all four major regions, including an 8.8% pop in the West.

Economic Events: (GMT)

09:00     EUR     German Ifo Business Climate Index     108.8     108.3
09:00     EUR     German Current Assessment                   116.5      116.3
09:00     EUR     German Business Expectations               102.0     100.9
The German Ifo Business Climate Index rates the current German business climate and measures expectations for the next six months. It is a composite index based on a survey of manufacturers, builders, wholesalers and retailers. This report includes Current Assessment and Business Expectations. The index is compiled by the Institute for Economic Research.
09:30     GBP      BBA Mortgage Approvals     37.3K      36.2K
The British Bankers’ Association (BBA) Mortgage Approvals measures the number of new mortgages approved by BBA-backed banks during the previous month. It includes more than half of the total U.K. mortgage market. It provides information about the buyers in the housing market in the U.K.
11:00     GBP      CBI Industrial Trends Orders     -13      -16
The Confederation of British Industry (CBI) Industrial Trends Orders measures the economic expectations of the manufacturing executives in the U.K. It is a leading indicator of business conditions. A level above zero indicates order volume is expected to increase; a level below zero indicates expectations are for lower volumes. The reading is compiled from a survey of about 550 manufacturers.
13:30     USD     Initial Jobless Claims                354K        348K
13:30     USD     Continuing Jobless Claims      3460K     3426K
Initial Jobless Claims and Continuing Jobless Claims measure the number of unemployed individuals who qualify for benefits under unemployment insurance.
A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

Feb 22

We’ve reached first key resistance for the week.  Traders keep that in mind.  If your long, nothing wrong with taking some off the table here and letting a bit ride. The important things to remember, first, is that there’s an intermediate cycle high due out there.  That means watching 1767 right now.  With Mid week Wednesday here, it seems to still favor higher, but always potential for peak day of the week after that.  We should keep in mind that the 2011 DOWNTREND LINE ON GLD was exceeded on the chart and was the reason for today’s big technical push. Now the swing traders are on. SENTIMENT NUMBERS are now high also as 22 out of 30 surveyed “analysts” gave the thumbs up this week. 

The other factor to deal with is the high that was created on the short term cycle chart.  That leaves the potential for a peak this week potential. One that would line up with the seasonal, and one with price.  So let’s be on guard.  We’ll favor higher into Wednesday, but we'll be on full watch for Mid week Wednesday and the potential it has to be the day of the weekly price high.  Watch 1767-1772 area on the up and 1739-1752 on the down. 

GOLD broke out of recent ranges to the topside just as we had predicted in our previously two reports to trade in a $1,730 to $1,760 range yesterday, We had expected that no matter what the result of the February 20/21 meeting to finalise the details of the second Greek bailout that gold would rise after the event. We had seen extremely subdued trading ranges and low volatility in gold prices over the past fortnight and suspected that participants were waiting for an outcome to the Greek bailout package before reentering the market. The resulting push higher has peaked at current levels around $1,759. However, we will not change our short term view on gold just yet. We would like to see gold close above $1,765 resistance for this to occur. More likely the range trading is likely to continue in the short term between $1,725 to $1,765 and traders should look to this range to continue to benefit from gold prices sticking to a limited channel for now.

 Economic Events: (GMT)

06:30     EUR        French CPI (MoM)                                                      0.3%                      0.4%

The French Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.               

            

08:00     EUR        French Manufacturing PMI                                       48.7                        48.5                       

08:30     EUR       German Manufacturing PMI                                      51.5                        51.0                       

09:00     EUR        Manufacturing PMI                                                       49.4                        48.8 

 Manufacturing Purchasing Managers' Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company's performance, which can be a leading indicator of overall economic performance.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.   

                        

 09:30    GBP      MPC Meeting Minutes                 

The Monetary Policy Meeting Minutes are a detailed record of the Bank of England's policy setting meeting, containing in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The breakdown of the MPC members' interest rate votes tends to be the most important part of the minutes.      

10:00     EUR       Industrial New Orders (MoM)                                   0.6%                      -1.2%    

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.            

15:00     USD                      Existing Home Sales                                    4.67M                     4.61M  

Existing Home Sales measures the change in the annualized number of existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of overall economic strength.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

Feb 21

 
Scenario for today

Elliott: irregular flat correction up 1744.83
Current rise should end around 1739.15.
Objectives of this downmove are 1728.50 or 1722.15.
A rise above 1743.45 is again bullish.
Warning: Imminent end of bullish move

Supports / Resistances

Res 2    1,743.4500
Ex-High    1,737.1000
Res 1    1,739.1500
Pivot    1,732.8000
Sup 1    1,728.5000
Ex-Low    1,726.4500
Sup 2    1,722.1500

 Economic Events: (GMT)

Brussels: The Eurozone Ministers continue in meetings with no decision at this time.

German Chancellor Angela Merkel’s center-right CDU/CSU-FDP government coalition on Sunday agreed with the center-left opposition parties to jointly nominate former East German human rights activist Joachim Gauck to become the country’s next president. Gauck is not a member of a political party. The role of the German president is mainly ceremonial.

Greek bailout will “likely” get final approval in the week starting March 12, according to statement on Finnish Finance Ministry website. “The final approval for activating the EFSF guarantees and completing the PSI operation are conditional on the Troika and the eurogroup deeming the PSI as successful and Greece to have fulfilled its commitments”

China’s VP Xi Jinping, in a speech in Dublin last night, said his country is considering more support for Europe. The official said “We are considering more involvement in helping address the European debt issue through EFSF, ESM and other channels” adding “China supports the European integration process, the euro, by purchasing European bonds.”

In Italy Dec industrial orders rose 5.5% in seasonally-adjusted m/m terms as a result of increased domestic and foreign orders. It was the steepest gain since march 2011, ISTAT said. On the year, unadjusted industrial orders fell 4.3%, down from -0.7% y/y in November. –Dec seas. adjusted m/m domestic orders +5.8%; foreign orders +5.1% m/m .

Italian Industrial orders for Dec +5.5%m/m from +0.2% in Nov. Unadjusted -4.3% y/y Dec sales sa +3.4%m/m from +0.1$ in Nov Workday adjusted +5.6% y/y Improvement, with increases in domestic and foreign orders with the largest gain since March 2011.

Italian PM Monti say that his government is sticking to 2013 balanced budget target

In France February manufacturing sentiment 92 vs January 92 (91)also France manufacturing morale came in at forecast in MNI

UK Gross mortgage lending fell 14.1% on the month in January but was up 10.2% on a year ago, according to Council of Mortgage Lenders data. As the CML figures are not seasonally adjusted it said the monthly fall in January was not unexpected. The 10.2% rise on the year.

Feb 20

 Long Term=Up / Medium Term=Up / Intermediate Term=bullish
Short Term =Neutral/Bullish (BUT MUST CLOSE ABOVE 1742 TO CONTINUE UPSIDE POTENTIAL)

Support and Resistance for Monday
Initial Resistance for 1736-1744 and 2nd tier 1749-1759
Initial Support 1716-1722 and 2nd tier 1695-1706

Last night’s update resistance was listed at 1734-1742 and the high was 1736---Support was listed at 1716-1726 and the low was 1717 (all prices spot Forex).

Recap and Overview

Friday was options expiration in the metal ETF’s GLD and SLV so that harness has been removed.  There’s still one for Silver as options expiration for March Futures is on the 23rd. The ‘control boyz’ would be best served if silver closed at $34 dollars and all of the options above that strike price would be theirs to keep.

Prices remained inside the February trading range last week and overall the market behaved in a normal manner, reacting to the various reports and key weekly time stamps like mid week Wednesday. Prices maintained their ranges on both sides of the fence during the week and return this week with pretty much the same numbers.

For Monday

we’re still in a trading range and we have not closed above 1736-1744 spot gold yet.  That area is a must first indication we need to see. That is first resistance on Monday. If we can’t get above that area, the downside will still be in motion.  The chart below pretty much is the “hurdle of the week” as far as prices are concerned. Here’s what it suggests.

Under 1736-1744 and the sideways and down trending pattern is still in play.

Above 1744 shows resistance at the 1755-1757 price range.  Those are the two main areas to watch on Monday.  That first resistance area 1737-1744 is the tough one for Monday and is the one we need to favor higher on Tuesday.  IF USA was not closed for Monday, I’d probably sell one of my Gold’s here as the other two would give me a lower price entry average.

On the downside, there are two areas WHERE PRICE has tested repeatedly and that is the 1700-1706 area and the 1710-1715  price point. This puts first weekly support at 1691-1701 spot gold.

Short Term (cycles)

although price has pulled back since February 3rd, the pullback is choppy and overlapping and that usually favors a pause in trend and not and change.  The short term cycle “window” is in play from today until the close of trading on Thursday.  If the cycles continue to play out as they have been, an upturn is favored.  Price can still drift lower as late as Thursday, so there is still some caution here.

That caution would be eliminated if we close above 1755-1767.  That will favor the new cycles have kicked in. Until we close above that area, we can’t eliminate the downside.

If we turn down again the key now for gold is to hold the 1695-1705 area.  A close below that area would change the chart pattern from a trading range look to a down trending look.

Medium and Long Term Channel line Test

The price test of the middle green channel line has resisted the first attempt and the last two weeks action has been a pullback to a downtrend line. If cycles bottom this week, it should be another test of the green line.

The 34 week moving average below at 1688 is secondary support if the mini red dotted line doesn't hold. A close above the green channel line would favor the correction is over.  As long as price is above the 34 week moving average, the trends are up.

 

What Next?

For Monday, it comes down to a few key numbers ---1742---1755---1767
On the chart below, any close above 1742 spot favors a test of 1755.
The chart shows the line in the sand the bulls have at 1705-1715.  The bears have retreated to the 1737-1742 area as their first line of defense and at the adaptive blue average.
 If broken, they’ll have to move to 1755.
That blue adaptive average has held all the price highs over the past week and a half. It sits at 1737 spot as we enter Monday. That’s the spot to exceed.

Bottom Line 

With USA CLOSED on Monday, gold could remain in a trading range and FIRST RESISTANCE is at 1737-1744.  That’s where we suspect the upside/downside decision for the day will be. As long as we close below 1742, the current short term cycle can still allow for some downside action. Let’s remain cautious until then.  If you’re playing the trade on the signals page, and If USA we’re open, I’d get rid of one of my three contracts at 1736.50 or better.  WATCH 1737-1744---that’s the turn point for Monday.

Scenario for today

Elliott: flat correction up 1735.00
Support at 1719.65 or 1714.26 should hold.
Then a correction to above 1735.69 is anticipated.
A clear break of 1706.39 is again bearish.

Supports / Resistances

Res 2    1,743.6900
Ex-High    1,735.8200
Res 1    1,732.9100
Pivot    1,725.0400
Sup 1    1,714.2600
Ex-Low    1,717.1800
Sup 2    1,706.3900

The gold prices dropped $1724.55 an ounce during flat trading, as speculation continued over whether a Greek bailout will be agreed next week. Signals from Chancellor Merkel and also the ECB that a Greek deal might be close to materializing on Monday, investors were in more positive sentiments. Gold continued its descent as investors moved from safety to more risky assets.
The US currency markets were quiet as were those for commodities and stocks ahead of President’s Day in the US on Monday.
“A quiet session,” said one gold dealer this morning.
Risk factor:  There are a lot of small spec long positions. That's not usually bullish and we are still inside a trading range.  BREAKOUT HAS NOT OCCURRED. Risk is that price does not break higher and instead goes lower.  Monday is a holiday in USA.  Markets are closed. Thus any long position has to be held until Tuesday. A lot can happen in three days.  Especially when they know USA is closed.

 YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.

Do your own due diligence.   

No one knows tomorrow's price or circumstance.  

I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.  

 I do not accept responsibility for being incorrect in my speculations on market trend. 

King Regards.

 TRADING POINT - ALIATUL TAU

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