Tronlink Wallet Airdrop: GOLD TREND May 7

May 11
4.00 PM GMT

The overnight news mostly favors the bears in gold as Chinese economic readings overnight rekindled talk of a hard landing. Furthermore, the markets were also presented with disappointing Indian economic readings and by a surprise $2 billion trading loss for JP Morgan. This loss by JPM is running speculation that the loss could be much bigger and the position is so big that it is NOT UNWOULD YET and it could take a few months to unwind it. But if the market keeps JPM on the wrong side of the trade, they won’t last months. They will get wiped out. Along with the dangerous situation going on everywhere else this latest news is enough to unravel equities and commodities even more today. However, this might be enough to have the control boyz step in here and hold these markets up.
The markets might have seen a bit of ongoing optimism from hopes that the Greeks might be able to put together an official government, but for the time being, the markets appear to have shifted their focus back toward the condition of the global economy and not so much on the situation in Greece.
Another issue that could be applying pressure to gold prices this morning, is news overnight of an increase in Chinese March gold production of 10.1% versus year ago levels. With another fresh new low for the move this morning, after an attempt to bounce yesterday, it is possible that some of the losses this morning were technical in nature and given the fresh damage on the gold charts, the bears probably feels like they have a technical edge today.
Economic sentiment is such, that an unchanged or negative US PPI reading could be seen as further confirmation that the US economy has indeed lost its forward motion. However, some gold bulls are hopeful that a speech from the US Fed later this morning will provide some fresh hope of US easing
Asian equity markets remained weak again last night with the Hong Kong market extending to a 7th straight loss. Weak retail sales figures from China rekindled hard landing fears again and that negative news was given added credence in the wake of disappointing Indian economic news overnight. European equity markets remained weak despite talk that Greece might be able to put together some form of government. However, the European markets were also off balance because of reports of rising protests against German leaders, which are being challenged in certain political sectors because of their hard line austerity stance. Early action in the US equity markets showed weaker action with the fear of slowing in Asia, turmoil in the Euro zone and ongoing disappointment with the pace of the US economy all pushing investors to the sidelines. The anticipation of slowing is becoming so entrenched that the trade probably expects to see a contraction in US inflation readings later this morning.
THE STORY HOWEVER IS THE JPM TRADE ANNOUNCMENT. This can really spook the market and right in front of massive regulatory debates. The banking model is going to fall under deep scrutiny and well it should.
Add the JPM trading issue to the table and there is room for much angst this morning. It might make the control boyz push the market higher to calm fears.
Today’s low in London at 1571 gives us a 5th wave down since the 1672 high. The question is whether that 5th wave is complete or if it still has some work to do. With the JPM announcement of major trade losses, there are a lot of uncomfortable market players. The control boyz will do all to try and hold equities up. We’re not really going to know how deep they try and take gold. We have the NOV Close of 1563 and the DECEMBER LOW of 1561. The big question is whether they take out those LOWS and clear the stops before the big bounce rally or if we hold at the 1570 – 1575 area and bounce higher next week before the final low on a pullback towards the 20th of the month.
So far we’ve been using the LOWER RED channel line as the BULL/BEAR point over the past few days. We’ve discussed we need a CLOSE inside that RED CHANNEL to neutralize the downtrend. Yesterdays attempt was another failure and now it comes down to how deep the INTRA DAY lows can be? We are getting close to a key low but today’s JPM NEWS does not help matters. IT COULD SEND GOLD HIGHER into the closes today, we’re just not sure how the control boyz will play it.
FIRST RESISTANCE FOR TODAY is 1589-1595 for session resistance. First session support is the 1577-1579 area. MONTHLY SUPPORT IS THE 1555-1566 area. 1566 is important on a closing basis today. That is 3 dollars above the NOV and Dec numbers we are watching. The only thing today is whether one wants to try and pick a low on the long side and then hold into the weekend with such danger lurking in the markets. LIQUIDITY is the biggest thing to fear and we should be aware of how dangerous it is for BANKS that are very insolvent at the moment. If the markets keep dropping, they have to keep liquidating as they do not have enough reserves to hold positions. THE POTENTIAL for a big intra day spike is a consideration and most likely a good reason to just wait until the market makes a low instead of trying to pick the bottom. If we get a big spike down and reverse, then it might be worth a look. WATCH 1566-1573 ---THAT IS A KEY POINT. The other key point on a big drop would be 1545-1550 INTRA DAY. London may have gotten their washout at 1571 --- lets see if the COMEX gets theirs. Until this market stops going down and the trends change – we may sound like a broken record, but the trend remains down. With the global danger, its probably best to let the MARKET pick the bottom and then look to get on once it stabilizes.
ANY NEWS COULD HIT TODAY THAT could change things one way or another. We think the lows are already in place for the day but we don’t want take anything for granted. Until we close above the red channel line, the overall trend is still down. BOTTOM LINE IS IF THERE IS TO BE A SELL OFF -- IT SHOULD BEGIN NEAR 10 AM NEW YORK TIME --- or right after the close in EUROPE which would be 11:30 AM New York Time. Be careful, it could be a wide swinging day.

6.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish (we remain in an choppy trading range in a downtrend channel)
Short Term= Bearish (It takes a close above 1666 to turn the trend higher)
Support and Resistance for Friday
Initial Resistance for 1603-1607 and 2nd tier 1613-1623
Initial Support 1575-1584 and 2nd tier 1561-1567

Recap

Gold futures edged higher Thursday following a round of U.S. economic data, with a pause in concerns over Europe’s banking and sovereign-debt outlook providing a floor for the metal. The most actively traded gold contract, for June delivery, recently traded up $3.30, or 0.2%, at $1,597.50 a troy ounce on the Comex. The June delivery month is less than 3 weeks away.
ARE THE STORIES ABOUT TIGHT PHYSICAL INVENTORIES THAT WE READ TRUE ? YES. A confidential source from the mid east who’s family is prominent in the Jewelry industry and who hedges gold and deals with physical and has a gold platform from the Bank of England confirms that getting GOLD at the moment IS DIFFICULT. There is a lot going on under the market. Gold is for all the MARBLES. He who owns the gold makes the rules.
LEVEL OF GOLD ACC TO INDIA DT 10 MAY 2012
S1 RS 28450 , S2 RS 28320 , S3 RS 28180
R1 RS 28500, R2 RS 28570 , R3 RS 28760
U.S. first-time claims for jobless benefits fell to a one-month low and China’s oil imports dropped to the lowest level since December. That was enough for the Dow to end a six day slide buy the gain was only19 points.
The European Financial Stability Facility's decision to extend funding to Greece despite recent political upheaval. The EFSF, Europe's bailout fund, paid Greece EUR4.2 billion in previously agreed rescue financing. This puts in place sufficient funds for Greece to last until the end of June. The fund held back EUR1 billion that will be paid out by June, depending on the country's funding requirements.
It seems that the Greek politicians know that the fear of GREECE not “honoring” its previous commitments is a powerful tool to use in negotiations with the powers in Brussels. GREECE HAS NOTHING TO LOSE IS THE OPERATIVE MINDSET OF THE SYRIZA AND ITS LEADER, ALEXIS TSIPRAS. It is the BANKS, ECB and IMF who are on the hook for a great deal of money. It is the ultimate moment of the PRISONER’S DILEMMA. (www.zerohedge.com)
The Bank of England voted on Thursday not to give Britain's struggling economy another injection of cash as concerns over stubbornly high inflation outweighed the risk of a prolonged recession and renewed dangers from the euro zone debt crisis.
Bernanke’s speech this morning was a non-event. He stated that liquidity was in much better shape at the nation’s banks.

What Next?

What is it that makes me call this dangerous? It’s because COMMODITIES and EQUITIES are falling together. The stimulus is no longer working. Europe needs a trillion dollars a month to not go under. This is now the 3rd or 4th time Greece doesn’t make the payment. The Euro land had to bailout again today to keep them afloat till June. Spain had to nationalize a bank today that was deep in Real Estate Mortgages. The situation is ‘elevated’ so to say and markets are very nervous. Even the fudged government statistics are having trouble hiding the reality of a potential massive slowdown taking place. So it’s best to be concerned about the current liquidity situation and to be concerned for one reason only;
THAT IS BECAUSE BEN BERNANKE SAID IN THE THURSDAY SPEECH THAT THE BANKING SITUATION IN USA HAS MUCH IMPROVED LIQUIDITY.
That means one of two things---------that there is NO LIQUIDITY LEFT or it has gotten slightly better. Why would he mention it? Because that is the underlying ELEPHANT IN THE ROOM to this whole scenario.
To the Gann chart
Last night we used 1605-1607 as the key to remaining in a downtrend. We got to 1602 on Thursday and price just dipped above the resistance line on the tick chart and closed below it.
The chart below uses a GANN ANGLE LINE. Look how the last five bars are trying to get back above the GANN line. THIS IS THE BULL/BEAR LINE. Below this line favors the downside and a close above it will favor a move towards 1615-1630 on a bounce. BUT as long as we are below it the potential to sell off is in play. A GREAT TRICK OF THE CONTROL BOYZ is to wipe out everybody by breaking the channel lines and causing stops to get hit. We’ve already seen how price is right on the long term green line on the long term chart and on the shorter term CHOP CHANNEL. Here is yet another key line showing where the BREAK DOWN potential resides. We’ve also discussed the 1560-1565 area and how it encompasses the close of November and the low of December. Will the control boyz go after those stops?

A REAL DEEP ZOOM IN SHOWS THE ACTION. The 1581-1584 area in June Gold is very important support first off on Friday.

Bottom Line

Above the GANN LINE and the market has recovery potential. Below the Gann line keeps the potential for price to keep moving lower on Friday. All trends remain down and the odds favor lower until price can get back above 1605 in gold. This market either turns here or it looks ready to shed another 30 or 40 dollars. The final chart below shows the 1680-1685 area. There is a potential that gold will try and hold that area and try to recover to the 1600 area. It is there where gold should make its mind up as to whether it wants to neutralize this downtrend or continue under resistance. For now, we have to continue to favor lower as that has been the correct trend and with all the trends pointing down, there can be no other status but to continue to favor lower prices for the moment. Look at the low from Wednesday. So far the push up was CHOPPY and overlapping and that still favors that the higher trend is still down at the moment. If we start breaking below 1580 odds favor we’re going to probably visit the 1555-1566 area.

May 10
4.00 PM GMT

Gold looks to have made a temporary bottom yesterday at the lower chop channel. Thus a bounce to the 1613-1620 area is in play for Thursday and Friday if we get above the first resistance area on the previous chart. We had a buy order on yesterday that missed the lows as we expected the market to penetrate the line by a little. That could still happen but for now, we have a bounce going on.

The overall trend is still down but this is an important price point to watch. If we close back above 1606, a short term bounce will be underway. The short term cycles are not due to bottom until next week and that is the only thing that doesn’t quite feel right about the current set-up and leaving the potential open that this is only a bounce.

In summary the market looks to have a temporary low----- watch 1603-1609 as first resistance on Thursday. If we close above 1603, we will look to 1613-1620 as the next resistance.

6.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish (we remain in an choppy trading range in a downtrend channel)
Short Term= Bearish (It takes a close above 1666 to turn the trend higher)
Support and Resistance for Thursday
Initial Resistance for 1603-1607 and 2nd tier 1613-1623
Initial Support 1575-1584 and 2nd tier 1561-1567

Recap

The markets continued their declines on Wednesday as equities and commodities once again sold off on continued angst on the European Debt Crisis specifically Greece and Spain where the reality of the “never going to get paid back” no matter how many times your restructure, refinance, and wheel and deal the problem is this. THERIE IS NO MONEY NOW TO MAKE THE PAYMENT, how will there be 3 years or maybe 3 months from now?

The way markets feed on themselves is by being leveraged up so much that a 10% per-cent move wipes you out. This is what is going on when you hear there is a rush to liquidity. When you have millions/billions of dollars riding it’s not like you can put a “market” order in to exit like a small trader selling a position or one or two contracts.

What Next?

Last night we favored a move towards 1612-1622 but the sell off was from the get go as 1606 was the high. We discussed if we did not get a bounce that the 1570-1580 was the first logical top.

The one thing we need to go is get back inside this RED CHANNEL LINE above 1605 on Thursday. AS LONG AS WE ARE BELOW 1605-1607 the DOWNTREND IS STILL IN PLAY. This is the first place to watch for resistance. If we've made a low, then we should close above 1605-1607 and go test the 1615 area on Thursday.

BOTTOM LINE

Price is at key support areas and there are many expectations for a low at 1550-1580 and we reached the first potential LOW on the WEEKLY CHARTS and the DAILY CHARTS within EACH RESPECTIVE CHANNELS. We might get one more probe and intraday penetration but a lot of people are CALLING THIS THE BOTTOM and it certainly has a chance. At the least we should get a good bounce. THE one thing to watch out for is HOW HARD THE MARKETS HAVE BEEN HIT and how many days in a row. That’s unusual to see that many.

But with THE WEEKLY HUI, and WEEKLY GOLD and DAILY GOLD all hitting respective channels----the odds are VERY HIGH that some type of bounce.

SOME TYPE OF BAILOUT or rescue will have to come out –and fast however. The bottom line tonight, is while most are calling this the bottom, understand if they are wrong here --- a bounce is going to develop just LIKE IT DID THE LAST 10 times they have told you the low is in place. One of these times they will get it and they will be able to say they called the last low.

In summary, any bounce should find FIRST MINOR RESISTANCE at the 1603-1607 and the 1615-1620 area if we end up rallying.

Look for the 1566-1584 if we go after another probe lower.

3.00 AM GMT
Watch out for a trading range of $1579/$1596 for today.

GOLD again tumbled almost $30 before short squaring overnight and the trend line support saw the price recover a little to finish the US session at around $1590, having once touched as low as $1580. A continuation of unwinding of risk asset positions have pushed the bullion lower before news that Greece will receive its latest debt bailout payment helped cut losses late in the US session. We re-affirm our view that falling price in gold will precipitate into further falls as gold provides no interest and has little physical demand. Yesterday's drop, which has cut this year's gain for gold to less than 2%, came with a huge trading volume about 40% above the daily average, implying an increasing number of investors initiating shorts and squaring long term bullish positions.

Compass Direction

Short-Term: BEARISH
Medium-Term: NEUTRAL

May 9
6.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish (we remain in an choppy trading range in a downtrend channel)
Short Term= Bearish (It takes a close above 1666 to turn the trend higher)
Support and Resistance for Wednesday
Initial Resistance for 1613-1622 and 2nd tier 1630-1633
Initial Support 1595-1604 and 2nd tier 1564-1577

Recap
Gold sentiment sluggish on political uncertainty in Europe – By Rujun Shen
SINGAPORE, May 8 (Reuters) –

Gold edged lower on Tuesday as a backlash by voters in Greece and France against austerity measures weighed on the euro, while prices are supported by

Bargain hunters lurking around the lower end of a recent range. The euro inched down, extending losses from the previous session after elections in France and Greece cast doubt on the political will and commitment to austerity measures seen crucial to tackling the euro zone debt crisis.

"The sentiment in gold is weak, after the changes in European governments again triggered worries about the bloc's debt crisis and pressure the euro," said Li Ning, an analyst at Shanghai CIFCO Futures. The decline in oil percent so far this month, eased concerns on inflation and peeled off some of gold's attraction as a hedge against rising prices, she added.

Gold has been trading between $1,620 and $1,680 for about a month, with an unfavorable macroeconomic environment weighing on top and investors waiting to pick bargains at the lower end."We see a small amount of physical buying on the downside, and probably more buyers will emerge if prices drop to the $1,600 level," said a Hong Kong-based dealer. Gold imports by India, the world's biggest buyer of bullion, could rise on pent-up demand from jewelers after the federal government decided to scrap an excise duty on jewelers it imposed in March, the head of a trade body said on Monday.

"However, the doubling of the import duty (to 4 percent) remains - and together with a weak INR (Indian rupee), the pent up demand market participants are expecting, may still disappoint," said ANZ in a research note. Hong Kong's gold exports to China in March rose nearly 59 percent on the month to the third highest level on record, while the gold flow from China surged to the most in at least two years.

That was the news making the headlines today. But what is causing all the selling of gold? Isn’t this the perfect environment for gold?

We think that bailouts and money printing are very bullish for gold and that negative interest rates are also very bullish.

However, a debt default or an INSOLVENT banking system is not good for gold for the simple reason that in a dash to meet margin calls from falling markets, banks are now liquidating what they have and some of what they have is gold. Banks are not the only ones, but I’ve been told from a former Forex trader who worked for a major bank that the losses on the Forex by banks has pretty much wiped them out. They are insolvent. They are a danger to the entire global infrastructure. Thus the potential that highly leveraged players are where the selling is coming from is important for one KEY REASON. If that isn’t the situation then the thousands of cheerleaders out there who keep telling you that gold is going to 5000 dollars might want to explain to us who is doing all the selling? Of course for those of us who think the market is fully manipulated, we already have our answer, but it takes more than just player when large and lengthy corrections of this size take place.
So what we have here is a mass deleverage of the system and gold and silver are a part of the leverage game. A researcher I know has received information that there are groups who are picking up all of this gold that is being sold off on the markets by the leveraged insolvent entities and these groups are assisting in the forced liquidation. That part I have no confirmation of but the bottom line is that this liquidity event and it is not yet complete.

Short-Term (Traders)

Last night we discussed the tiny space where gold had placed itself between the green and yellow channels and we discussed that the action was the final chop sequence before the next 30 to 50 dollars short term move that was due to begin once we came out of this section. Unfortunately, there was no way to know if the chop was going to be with us or not on Tuesday and I chose for my own account to not trade the market due to the action of the past few weeks. Nevertheless, while everyone else has remained bullish on gold, our indicators have been bearish and they continue to forge to lower price levels.

On the intra day email update on Tuesday, we targeted 1597-1603 as the most likely area for a low and the low came in at 1595. We can see the lower purple channel line was penetrated but that so far, the closing hourly prices have been above that line. Resistance going into Wednesday will be the 1609-1614 and the next purple channel line at the 1620-1622 area. First support will be 1595-1605 but the weekly range and the chop channel shows one more place where a low could develop. Let’s go to that next chart.

What Next?

Last night we favored a move towards 1600-1614 if we broke below the 1633-1637 area and that played out as we hit 1595. The chart shows that the lower purple channel line held an hourly closing basis but the penetration intraday took place. Thus this area will be first support on Wednesday in the 1594-1600. It will depend WHEN it will be tested as the downtrend line is sloping downwards. We also discussed the lower CHOP channel line at the 1570 area. That also is a potential support but my initial thoughts is that we may wait until NEXT week to go check out that price area.

From a trader standpoint

The chop certainly ended last night as it was a waterfall event. We don’t think the chop is over totally, but the downside now seems to be trending. Mid week Wednesday is here and it’s a tuff call. We favor a bounce towards the 1612-1622 area. That midway purple channel line is the resistance to watch. On the downside, that lower purple channel line should provide support in the 1594-1604 area. If gold turns down without a bounce, then we’ll favor a test of 1570-1580 but we give it low odds that we won’t see a bounce.

BOTTOM LINE

We favored a move whichever way the break of the Green and Yellow zone would occur and the downside was the choice. As we mentioned on last night, the odds had the edge to the downside if we broke below 1633.

The final chart is the Gann angle chart Note how the exact low at 1595 was at the green support zone on the chart. Here too we see 1615 (that blue dotted trend line) as the most likely resistance on Wednesday (give or take a few dollars). That would be in line with a Fib retrace 23% of the move down from 1672 so that plays.

THE WEIGHT of the evidence favors a bounce to the 1612-1622 area with the ideal target around 1615 as the resistance to watch. The OVERALL TREND is still down and we don’t think the correction is over. Mid Week Wednesday is usually a turn point for the week where we see a high (or low) between Wednesday and up to early Thursday and then there is usually a counter bounce. Since we’ve already reached a key support point, a new low would probably favor that it would be another down day towards the 1575 area. In summary, any bounce should find resistance near 1615 (plus or minus a few bucks) and support should be the 1597-1602 area if we end up in a consolidation day. If we get another sell off, look for the 1570-1580 area to provide closing support. All trends except the long term remain in bearish mode.

May 8
6.00 PM GMT

With another new low for the move overnight, weak global equity markets and adverse euro and dollar market action, gold is facing almost the same overall environment as was seen on Monday morning. While the focus yesterday was on the potential for EU political and economic turmoil from the change in French leadership, the focus today appears to have shifted to concerns of political and economic turmoil from the change in leadership in Greece. Given all the turmoil and uncertainty in the Euro zone, flight to money is still flowing toward the Greenback and the Yen and that action has contributed to the weakness in gold prices so far this week
It is also likely that last Friday's US payroll results are also contributing to the bear case in gold as the fear of slowing remains a fixture in the marketplace. A sharp jump in US Consumer credit figures yesterday afternoon has also fostered concerns of further slowing in the US as it would seem like US consumers are relying on credit and not income for a large portion of their spending. In fact, US Consumer Credit vaulted higher and in the process the March tally expanded at the fastest rate in over 10 years! With little in the way of scheduled US economic data today and a weaker equity market track, gold is likely to remain under pressure, as it tracks commodity market fundamentals.
European gold traders continue to lament the lack of lift in gold prices off potentially beneficial changes to Indian import rules, but an improvement in Indian gold demand is probably being largely offset by fears of sagging global investment demand for gold. With an empty US report slate today, gold is likely to see some impact from two Fed speeches scheduled for this morning.
Chinese equity markets were weaker off lingering concerns toward their property and development sectors. The Nikkei managed to recover from a 3 month low, but investors and traders there are still worried about the potential negative impacts from the latest developments in the Euro zone. European equity markets were also under initial pressure again today, as trade fears have now turned back toward Greece and away from France. Early action in the US equity markets showed noted weakness again as the fear of global slowing and the potential knock-on impacts from the Euro zone remain on the front burner.
Gold going to the chart
It’s not like we haven’t been looking for lower prices, its just that the chop was impossible to trade. Now the break to the downside has accelerated and for the first time, we are not trading in a chop mode but we are trending again today.
The huge drop in gold has us down to the lower purple channel line at 1600. We suspect the low is going to be in the 1590-1600 area and a bounce will develop from there towards 1615. Traders can look at the 1597-1603 as the potential low or at least temporary low from this morning’s action. This LINE is the most likely support area today.
There is also weekly support at the 1570-1575 area on the daily chart with the CHOP channel we’ve been looking at on the website. But I don’t think we get there today, but maybe tomorrow. For today I think anywhere near this purple channel (give it to about 1597) has a good chance of giving us a bounce.
With the situation in Euro land, we still need to be careful. If we break this purple channel line, then the potential of reaching the 1570 will be in play. Again, we would that number won’t come into today, but we won’t rule it out.
IN summary, we expect 1597-1603 to give us a chance for the low today.

A bounce back to FIB 1614 at some point would be current bounce expectations.

If you’re a nimble trader, and know how to use your stops, this lower purple line looks like a place you can trade off for a bounce.
As we’ve reported on the website, all trends,, except the long term remain down. Look for bounce from this trend line and then we’ll see what the pattern looks like.

4.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish (we remain in an choppy trading range in a downtrend channel)
Short Term= Bearish (It takes a close above 1666 to turn the trend higher)
Support and Resistance for Tuesday
Initial Resistance for 1642-1646 and 2nd tier 1652-1661
Initial Support 1623-1633 and 2nd tier 1604-1614

Recap
India cancels jewelry tax

My mid-east contact told me last month that this would happen and no tax would be passed on gold in India and the call was correct as Indian Finance Minister Pranab Mukherjee Monday removed the excise tax on sales of all gold jewelry, a move that will calm retailers who went on strike when the scope of the levy was widened in March. In the federal budget on March 16, Mr. Mukherjee imposed a 0.3% excise tax on non-branded gold jewelry. Branded-jewelry sales by companies such as Tata group's Tanishq already attracted a 1% tax.

A new President was elected in France, and it’s a socialist movement. He has vowed to remove the budget cutting process that has been agreed upon by Euro land. Germany says they do not renegotiate what has already been agreed upon.

The issue of course is whether Austerity is the opposite of prosperity and why would everyone have to lose precious standard of living in order to pay off bad loans or a government that spends more than it takes in. There are a lot who feel that the whole IMF thing is to get you deep enough in debt that in the end the HARD assets of the nation are sold off to pay what was basically created out of thin air---paper debt.

In any event, the control boyz used the France election to open the Euro down 120 pips from Friday’s close, to plunge S&P futures down 20 points, and to continue to massive chop in gold and silver and to put commodities at yearly lows on the index charts. Once all the markets had opened and all the stops cleared at the bottom of that range at the low volume Sunday night market open, the rest of the day was spent moving the markets back up to or close to where the markets had closed on Friday. In other words, the boyz had their story set to open the markets lower and clear out the traders. If the other side of the elections had won, the story would have been more like the markets sold off because he was reelected. It would not have mattered, they did what they wanted in the markets and did it where the least volume exists---on the Sunday night open for the week. This is why we emphasize it is very hard to trade the markets at the moment. BUT IT WON’T always be this way. The trend will return to the markets. They always do. But we have to have the patience to see that return. The problems are the same and the issues are the same. The key now is that MONDAY retraced the hard opens and now the question is will Tuesday press forward or turn back down in the markets.

Short-Term (Traders)

Readers will note that over the last week I’ve used a dual bottom channel line (Green and Yellow) for the lower uptrend portion of the wedge we are in. Note how today finally came together and showed that these two lines are in fact valid as price traded in what was probably the choppiest day range I’ve ever seen. I was fascinated to see how much support and resistance was tested within these lines and how the provided right where price would trade today. Even two more attempts were made to break to the downside by going below the green line, but price reversed BOTH times again to finish the trading day---RIGHT IN THE MIDDLE of those two channel lines.

I suspect that this is the FINAL CHOP sequence before the next 30 to 50 dollars happens as the next short term trend is due to lock in price for the next 10 to 18 days as the short term cycle window for a trend change closes after Wednesday. I think when we come out of this little section the next short move gets underway.

Let’s reiterate what we discussed last night as to what is going on with the charts to stay in focus.

The FAT yellow and FAT red lines represent the wedge that gold is stuck in and lines that will soon converge and force a price move. Because of the chop the overall direction can still go in either direction. The advantage is to the downside, but we’ve already seen the chop that exists and so the risk/reward on a short term trade is very high here because reversals can happen at any time. Right now gold is fighting to stay above the lower green and yellow uptrend. If that space between the lines gives way below the Friday low, then we will favor a move down to the lower purple line in the 1600 area.

We mentioned the 1642-1645 area is where price had to find support on Monday and 1643 was the high. For Tuesday this first area is around 1650-1655 where price must find support and have a chance to setup for a move higher. It’s the same on the downside where that MIDWAY purple line has to give way and become resistance for the downtrend to develop. Thus we’re going to have to move below 1620-1625 on Tuesday because that midway line will be at that area by then. Remember we’re looking at a TICK chart above and that removes TIME and shows the real trend based on VOLUME as each bar is 25 contracts trading hands when we look at the mini 33 ounce contract and about 500 contracts per bar if we look at the big 100 ounce COMEX contract.

The fat red downtrend line is the key to the UPSIDE. We have to conquer it to rid ourselves of DOWNTREND LINES. Note how it is the last DOWNTREND on this WEDGE. Once it supports price it suggests we are moving OUT of this wedge.

Last night we looked at a move below 1633 to start favoring the downside---today’s low was 1633. So gold here also has not tipped its hand lower. Tuesday’s price has to dip below 1620-1622 to break to the downside as that midway line gets lower and lower.

In summary---the CHOP continues and there is nothing to say which way we break yet.

What Next?

Last night we favored a range of 1630-1647 and we got 1632 and 1643. Going into Tuesday, there are indications that the market is ready to break lower and move towards 1600-1614 IF WE CAN MOVE BELOW 1633-1637. That seems a very important area on Tuesday.

Because of the CHOP we cannot eliminate a fake out and that is the problem with a chop. You never know when the real move resumes.

Short term cycles look to have turned down but the ‘window’ is open until Wednesday, so it’s not totally confirmed yet. The chop is all over the place so we could just as well have an up or a down day on Tuesday.

From a trader standpoint

The tick chart again shows the Situation. THE GREEN and YELLOW line is the place where the mess is now situated. There is one more support below 1620 at that midway channel line. If we are to move up into TUESDAY, then we feel that the 1633-1637 area needs to hold right on this lower green channel line. On the UPSIDE, price needs to get ABOVE THE YELLOW LINE that is showing near 1650 for Tuesday. Thus is possible to remain in this range one more day in the 1633-1652 area for Today’s trade range.

The daily chart using Gann Angles and Arc’s continues to warn of danger also. There’s all kinds of resistance lines directly above. We see 1642-1645 ---- 1655-1660 and we also see a convergence of lines all meeting at 1660. When all lines meet up it can signal a trend change is due at this time frame. That would play with the short term cycle window closing after the Wednesday trade. Part of the chop problem is it gives so many area’s to watch for support or resistance we don’t know which one to favor.

This chart shows 1615-1620 as the next support and then 1590 and resistance at 1650-1655.

BOTTOM LINE

Which ever way we break out of the GREEN AND YELLOW LINES on the tick chart above favors the next move to go in play afterwards. We still think the odds have the EDGE lower on TUESDAY if we break below 1633. Thus watch 1633-1637 on the downside (green channel line) and 1650-1655 on the upside (fat yellow line) – and while it can go either way, below 1633 has to favor lower.

May 7
3.00 PM GMT

The overall pattern looks bearish to us but it can still resolve either way. THE GRINDING INSIDE this range continues as more and more traders have now moved to the sidelines in wait of a break one way or another. IT would seem with all of this congestion within these two lines is reaching the decision point. When I first drew these two channel lines last week, I found it very unusual. This morning we have the answer as the CHOP HAS REACHED a chaotic pace. Once the real move happens a good sized move should develop. But the fake outs can be at every turn. The lines on the chart seem to be overdone, but it is the market itself that has set up so much pattern confusion. Support for the day is the 1635 area at the lower yellow line…but a break there still has the lower middle purple downtrend line at 1622-1628 area where price could hold as it did on Friday. A break below 1622 favors a move down towards 1600. There is a minor support at 1610-1615 and then weekly at 1570-1585. With the short term cycles we watch, the downside has the advantage and right now still has the advantage. But it is an advantage that can be loaded with fake outs. RESISTANCE will be the 1645-1650 area where the yellow uptrend and middle purple line meet. In order to favor the upside, price needs to close above 1660-1665 and even then, the 1672-1680 area will also offer resistance.
The bottom line is that it is better to wait for a trend of some type to find a trade that will last a week or two. For the short term traders, it looks like 1645-1650 is a consideration for shorts with stops above 1655 and on the long side, buying the 1630-1635 area with stops below 1623 is a consideration. The problem has been the market goes just far enough to clear the stops and then reverses. Watch this TOTAL MESS at the lower green and yellow uptrend lines. Once we come out of that area, there’s a purple line on both the up and downside of the range. It will be that area that might provide direction. In other words, the middle purple line at the 1628 area ---- is either a buy with a stop at 1620-1622 or a sell with a stop at 1640. It’s the same on the upside. That purple channel line just under 1650 is either a sell with a stop above 1655 or a buy with a stop back below the yellow channel line. Overall, it’s a mess and from a risk/reward scenario, it really is best to wait for a trend. When we see a set up, we’ll alert you. LETS see what the market does coming out of this MESS between the green and yellow lines.

8.00 AM GMT
Monday favors a trade range of 1630-1647.
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish (we remain in an choppy trading range in a downtrend channel)
Short Term= Bearish (It takes a close above 1666 to turn the trend higher)
Support and Resistance for Monday
Initial Resistance for 1646-1652 and 2nd tier 1660-1666
Initial Support 1631-1636 and 2nd tier 1614-1621

Short-Term (Traders)

The verdict is still out on what this choppy mess outcome will be. There’s a battle between uptrend and downtrend going on. The small purple lines represent the downtrend channel and the small green lines represent an up channel. The FAT yellow and FAT red lines are the wedge that gold is stuck in and lines that will soon converge. Because of the chop the overall direction can still go in either direction. The advantage is to the downside, but we’ve already seen the chop that exists and so the risk/reward on a short term trade is very high here. Right now gold is fighting to stay above the lower green and yellow uptrend. Price supported on the middle down trending purple channel line. If that line gives way below the Friday low, then we will favor a move down to the lower purple line in the 1605-1615 area.

The 1642-1645 area is where price has to find support to be in the uptrend portion of this set up. There is additional resistance at 1650 where the upper purple line resides and the 1660 area has the fat red downtrend line and small green line meeting up on Monday. Since we’re in such a chop any one of this lines could provide resistance for the day. Any time we are below 1633 brings danger to a downside move toward 1600. This 1640 area is right in the middle of this entire mess. And the best thing to do when nothing is TRENDING is to wait for it to begin to trend. We lose the majority of our money when we trade in markets that are not trending. It’s best to remain patient until we see something that develops a trend. For now, we favor the downside. If we start closing above 1655-1660 then we’ll start to favor the upside. Let’s see if gold can get above the lower green and fat yellow uptrend line and close above it.

Short Term – Short Term Cycles

The Short term cycle turn ‘window’ is in play until Wednesday of this week. For now, it looks like the trend has turned down. If we make a new low below 1623 within the “window” it could qualify as a low point. We’ll address it as it develops. For now, we’ll look to the downtrend as the short term trend until proven otherwise. A close above 1660 would definitely get our attention and a close above 1672 would turn the tide on the short term.

As far as the chart, we remain in the (chop channel) a choppy overlapping downtrend channel that we have been in for nine weeks. Since we’re still in the channel the lower downtrend line is activated and the potential for price to move to the 1570-1580 area is in play if we break below 1620. As long as we are in this channel, the downside has the advantage.

What Next?

Monday favors a trade range of 1630-1647. Short term cycles look to have turned down but the ‘window’ is open until Wednesday, so it’s not totally confirmed yet. The chop is all over the place so we could just as well have an up or a down day on Monday. From a trader standpoint watch the 1635-1640 area. That’s where the pivot area for the day is most likely at.

Bottom line

The daily chart using Gann Angles and Arc’s continues to warn of danger also. It looks like support is where the first blue dotted downtrend line and the outer edge of the RED ARC resides. That PUTS SUPPORT at the 1623-1626 area. It also gives 1642 as upside RESISTANCE on the spot market. In summary, the weight of the evidence (bounces aside) still favors the downside but it’s such as sideways chop right now that it can go either way. WATCH 1633-1635 on Monday for first support and the 1645-1650 area for first resistance.

May 7
6.00 AM GMT
RECAP

Once again gold got to the very edge of a breakout reaching the upper trend lines and the weekly resistance zone (1666-1672) hitting 1672 on the button and turned down from there. We were expecting a breakout above the chop channel and follow through from the chart action and for the seasonal to make a move higher but it wasn’t in the cards for gold.

One of the things happening is that gold is in a long wave correction and that time frame always leads to confusion, and can cast a shadow of doubt over the long term prospects of the gold bull market. This is especially true for short term traders. There are many who are now throwing in the towel and have come to the conclusion that it is no longer a market that can be traded and so they are moving on. But all that is really happening is that the market is working through a correction that quite frankly was overdue.

There is a time to trade and a time to NOT trade. The chart below shows that over the last 11 years, there have been three times when not to trade and that is during long term corrections.

If you’re experience is that you’re totally frustrated with this market and that you have given back most of or all of your gains over the past year, it is because the market environment over the last 8 months has been different that it was in 2010 and for the first half of 2011. The difference is that markets are NOT TRENDING RIGHT NOW. They are CORRECTING. And when markets are not trending and we try to trade them like they are, then the results are usually you lose everything that you’ve gained.

GoldTrendandCorrection

The chart shows when we make money and when we lose it. Making money in 2010 and 2011 was easy because TRENDS lasted a long time and once signals to long the market came into play, the trends would extend and profits were realized. That has not been the case this year so far because gold is in a long wave correction just like it was in 2006 and 2008. I can recall in 2008 a market so choppy and overlapping that I gave away a lot of the profits I had made in the previous year. Since this is a long term chart, it doesn’t show the extent of the chop we are seeing. But the point that there are times when to trade when it is optimum and times to trade when it is almost impossible to make money doing so. This is so in all markets. There are times when they trend and times when chop. When they chop, trading is disastrous because the only way we can make money (unless you’re a day trader) is when the market is trending.

4.30 AM GMT

GOLD defied gravity to trade higher after the release of a disappointing US non-farm payroll figure last Friday, recording a trading range of $1626/$1647. However this Asian morning is seeing gold rapidly declining toward $1636 reacting to a sharply weaker euro, which opened 70 pips lower this morning on the backs of news that the Socialist Francois Hollande ousted Sarkozy as the new French President. The market is doubtful that Hollande will form a good political union with Germany to tread the water the eurozone's problems. We are still neutral on gold in the short and medium term as we evaluate sustainability of gold's safe haven demand against its selling pressure in face of a strengthening US dollar. Technically the bullion is still carving its way across the downward channel, being constantly depressed by the down trend resistance. Conservative investors are advised to sit patiently for a breakout of the chart pattern before taking aggressive actions

Compass Direction

Short-Term: BEARISH
Medium-Term: NEUTRAL

2.30 AM GMT
It should test 1652.89 area after which a sell off down to 1630.40 or extended to 1618.49 area is expected.

Supports / Resistances

Res 2 1,659.0800

Ex-High 1,647.1700

Res 1 1,650.6900

Pivot 1,638.7900

Sup 1 1,630.4000

Ex-Low 1,626.8800

Sup 2 1,618.4900

Bearish Gold Formation To Take Shape As FOMC Talks Down QE3

Fundamental Forecast for Gold: Bearish

Gold ended the week off by more than 1.20% as the greenback mounted a counteroffensive early in the month and the bullion may continue to give back the advance from early this year amid a shift in the Fed’s policy outlook. Rhetoric disseminated from multiple voting FOMC members saw expectations for further Fed easing subside with demand for gold as a hedge against inflation continuing wane.

Indeed, it seems as though San Francisco Fed President John Williams is joining Dennis Lockhart and Jeffery Lacker, who all serve on the FOMC this year, as he takes note of the more robust recovery, and it seems as though the committee will continue to move away from its easing cycle this year as growth and inflation gather pace. As the fundamental outlook for the world’s largest economy improves, we may see the Fed lay out a tentative exit strategy going into the second-half of the year, and the shift in the policy outlook certainly casts a bearish forecast gold as market participants scale back speculation for QE3.

Although the April non-farm payroll report disappointed today, sending gold off the weekly lows, the impact will remain rather benign as it’s unlikely that the central bank will shift its policy on account of a single month’s print. In fact, the magnitude of the gold’s advance on the back of the print was limited despite a substantial sell-off in risk assets suggesting downside pressure on the precious metal is likely to persist. However looking ahead to next week, the single greatest impact likely to affect gold prices are remarks made by voting Fed officials with Richmond Fed president Jeffery Lacker speaking on the US economy on Monday night. While we expect to hear more hawkish comments from Lacker, remarks made by board member Sandra Pianalto on Wednesday are likely to be of particular interest. Pianalto, a known dove, may look to soften her stance after she hinted at a possible exit strategy last month with gold likely to come under pressure as the greenback continues its recent advance.

From a technical standpoint, gold remains within the confines of descending channel formation dating back to the March 1st highs with the precious metal failing an attempt at a topside breach early in the week. Gold remains in a range with daily support seen at the 61.8% Fibonacci retracement taken from the late December advance at 1624 backed by the April low and 1612 and channel support. Topside resistance stands at this week’s high at 1670, which also coincides with the 50 & 100 day moving averages, backed by the April high at 1682. A look at the broader structure sees the yellow metal consolidating into the apex of a broad wedge formation dating back to May of 2011 with prices likely to remain range-bound pending a more substantial break-out. - MB