July 20 Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close) Medium Term=BEARISH (Major Resistance 1672-1705 Monthly Close) Technically in bearish mode until we close above 1672. The 1642-1660 area is first medium term resistance. Intermediate Term= NEUTRAL – Need a close above 1620-1625 to favor a key intermediate term low and go bullish Short Term= NEUTRAL– A close above 1595-1603 will neutralize the downtrend and go to bullish. A close below 1547 would put the trend back to bearish. 
What Next?
July 19
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close) Medium Term=BEARISH (Major Resistance 1672-1705 Monthly Close) Technically in bearish mode until we close above 1672. The 1642-1660 area is first medium term resistance. Intermediate Term= NEUTRAL – Need a close above 1620-1625 to favor a key intermediate term low and go bullish Short Term= NEUTRAL– A close above 1595-1603 will neutralize the downtrend and go to bullish Support and Resistance for Thursday Initial Resistance for 1582-1592 and 2nd tier 1596-1603 Initial Support 1560-1571 and 2nd tier 1547-1555 RECAP
What Next?
Thursday close was just about at the 1580 area and that still leaves the potential that Friday could probe lower. Prices remain inside a sideways affair. Support will be 1573 and then 1555.
In summary
, the next two week cycle is about to kick in. Any close above 1603 will favor the upside as the choice. First target would be 1620-1625. Any close below 1580 leaves the downside open. That LOWER BLUE LINE IS THE PIVOT --- or bull/bear line. The UPPER GOLD down trend line at 1583 is the downside line. In between 1583 and 1595 is a neutral zone. Anything else would be a guess as to direction and we must use the chart to sort out the odds and put them in our favor.
RECAP The Fed meetings ended today with the same as the last few. “We will do what we have to do.” It’s becoming apparent to the market that the FED is out of major bullets and only arrows remain. In a way, he is down to one thing. BLUFF. He has a gun and not bullets. He is hoping we only see the gun and have not counted how many shots he has taken.
The Fed is not united in favor of more quantitative easing, and says that despite the Fed's claims that it operates independently of political considerations, the November elections point to the meeting in question as the most likely launch for the program.
In summary
the next two week cycle is about to kick in. Any close above 1603 will favor the upside as the choice. First target would be 1620-1625. Any close below 1580 leaves the downside open. That LOWER BLUE LINE IS THE PIVOT --- or bull/bear line. The UPPER GOLD down trend line at 1583 is the downside line. In between 1583 and 1595 is a neutral zone. Anything else would be a guess as to direction and we must use the chart to sort out the odds and put them in our favor.
Thursday is usually an up day on this type of pattern we saw this week. but this time its the day after the FED --- and the market.
July 18 Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close) Medium Term=BEARISH (Major Resistance 1672-1705 Monthly Close) Technically in bearish mode until we close above 1672. The 1642-1660 area is first medium term resistance. Intermediate Term= NEUTRAL – Need a close above 1620-1625 to favor a key intermediate term low and go bullish Short Term= NEUTRAL– A close above 1603 will neutralize the downtrend and go to bullish Support and Resistance for Wednesday Initial Resistance for 1588-1596 and 2nd tier 1610-1620 Initial Support 1570-1580 and 2nd tier 1557-1562 RECAP For the 2nd day this week, prices touched both the support and resistance zones listed from last night. It was speech day for the Fed and by the end of the day it’s the same old same old. They will “do” something if the economy and unemployment doesn’t improve. In other words, they are out of bullets and trying to make believe the gun is loaded still. I don’t even think they know if another round of QE whatever would do anything. And they know if they did do a QE and markets turn lower, it would be curtains. We move to Wednesday and another FED day. Once the FED is done, we go back to the Europe crisis that has no way out, and probably more corruption stories, and 90 earnings reports for USA companies. Don’t look now, but things are about to get worse as the summer progresses. What Next? We got our move to 1598-1607 from last night as the high was1598.80 and then price moved all the way down to 2nd tier support and then back up to where we began the day. With the final FED day on Mid-Week Wednesday and the swing down to 1570 and back to 1590 today leaves us wondering if Mid-Week Wednesday gives us a high instead of a low? Whenever the Fed testifies it’s hard to rely on normal parameters and cycles. Thus it’s a tuff call and with the Fed we have to favor either way. Tuesday was a prime example. From the open on Access on Tuesday, price was in a tight range but eventually made the high 10 hours later at 1598 and then moved all the way down to 1570 and then reversed higher and back to 1590. There is nothing to say we can’t move lower again on Wednesday. The last two Fed meetings had big drops after completion so we can’t ignore the potential. With the next short term 2 week cycle window open and the ideal day only 28 hours away, we’re right in the zone for a change. Tuesday could have been it, but these markets are unpredictable and a final push down CAN’T be eliminated just yet. Going back to the hourly chart here’s what to look for. 
The lower blue line is the bull/bear line where it either becomes resistance or support. As you can see we are having a battle there now. ANY CLOSE BELOW 1580 keeps the downside still in play as we would be below the upper GOLD down trend line. Any close above 1603 favors the low is in and a push towards 1620-1625 will be in play. If the short term cycle doesn’t invert and we get two weeks to the upside, once we clear 1625-1630 the potential to move toward 1680 will be in play. On the downside, support is the 1570 area then 1560 on Wednesday. Weekly and Monthly channel support is the lower red line at 1530-1540. July 17
RECAP For the 2nd day this week, prices touched both the support and resistance zones listed from last night. It was speech day for the Fed and by the end of the day it’s the same old same old. They will “do” something if the economy and unemployment doesn’t improve. In other words, they are out of bullets and trying to make believe the gun is loaded still. I don’t even think they know if another round of QE whatever would do anything. And they know if they did do a QE and markets turn lower, it would be curtains. We move to Wednesday and another FED day. Once the FED is done, we go back to the Europe crisis that has no way out, and probably more corruption stories, and 90 earnings reports for USA companies. Don’t look now, but things are about to get worse as the summer progresses. What Next? We got our move to 1598-1607 from last night as the high was1598.80 and then price moved all the way down to 2nd tier support and then back up to where we began the day. With the final FED day on Mid-Week Wednesday and the swing down to 1570 and back to 1590 today leaves us wondering if Mid-Week Wednesday gives us a high instead of a low? Whenever the Fed testifies it’s hard to rely on normal parameters and cycles. Thus it’s a tuff call and with the Fed we have to favor either way. Tuesday was a prime example. From the open on Access on Tuesday, price was in a tight range but eventually made the high 10 hours later at 1598 and then moved all the way down to 1570 and then reversed higher and back to 1590. There is nothing to say we can’t move lower again on Wednesday. The last two Fed meetings had big drops after completion so we can’t ignore the potential. With the next short term 2 week cycle window open and the ideal day only 28 hours away, we’re right in the zone for a change. Tuesday could have been it, but these markets are unpredictable and a final push down CAN’T be eliminated just yet. Going back to the hourly chart here’s what to look for. The lower blue line is the bull/bear line where it either becomes resistance or support. As you can see we are having a battle there now. ANY CLOSE BELOW 1580 keeps the downside still in play as we would be below the upper GOLD down trend line. Any close above 1603 favors the low is in and a push towards 1620-1625 will be in play. If the short term cycle doesn’t invert and we get two weeks to the upside, once we clear 1625-1630 the potential to move toward 1680 will be in play. On the downside, support is the 1570 area then 1560 on Wednesday. Weekly and Monthly channel support is the lower red line at 1530-1540. July 17 Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close) Medium Term=BEARISH (Major Resistance 1672-1705 Monthly Close) Technically in bearish mode until we close above 1672. The 1651 area is first medium term resistance. Intermediate Term= Bearish – Need a close above 1633-1642 to favor a key intermediate term low. Short Term= Bearish– A close above 1603-1610 will neutralize the downtrend. Support and Resistance for Tuesday Initial Resistance for 1596-1608 and 2nd tier 1615-1622 Initial Support 1583-1588 and 2nd tier 1570-1577 RECAP
What Next?
Bottom line
Last night’s update favored a range bound day before the Bernanke testimony and we hit support on a spike down and back up and we played around resistance for a better part of the day. The 1576 low was just one dollar from the bottom listed 1575 and the top was just one dollar into the resistance 1594.
Bernanke testifies in front of the Senate Banking committee on Tuesday and Wednesday. He has a lot more on his plate with the LIBOR scandal, the PFG failure and loss of customer segregated funds, and of course Ron Paul. The Libor scandal is getting close to reaching the USA and the PFG failure now has none other than JPM involved in yet another fraud issue. We hear he will be grilled on LIBOR but we’re not sure on the other two.
Since mid May, gold has traded in the 1540-1630 area and it seems like gold has gone from either tanking or rallying at jobs reports to making the clear the stop moves from the FED meetings. The last two both produced 80 dollar tanks to the downside. In between those last two meetings gold stages a 60-80 dollar recovery and gets tanked again. This last drop was only 55 dollars but then again, it was only FED minutes last week. Once again, gold has returned to near 1600 in preparation for the next two days of testimony.
The problem for TRADERS is which way are they going to make the 50 dollar move in gold this time, up or down? One would think he’s going to be very accommodative but even if he is it doesn’t mean that the control boyz won’t drop price either.
Last night we reported that the COT reports showed the commercial interests had moved to a NET LONG position of the highest degree in a few years. For the most part, these are the controlling interests in the market and make up part of the “control boyz” – not all mind you, but some. Mining companies are commercials as well. Industry that uses metals are commercials and as we all know so are some banks.
THE COT (commitment of traders) data has a few analysts who study it conclude that it’s a BULLISH situation when COMMERCIALS (smart money) have moved to a net long position and that is true. Keep in mind that there is no guarantee that they are right, but they are the best position to know the true condition and they have the strongest hands. In other words, they are more right than wrong. The thing to keep in mind is they are not a TIMING tool. In fact they can be very patient until there are no more sellers. When the buyers re-appear, that is when prices start to rise and they begin to sell into the rallies a bit at a time until they become net short again. Sometimes the rallies will begin in a short amount of time, and other times it can take a month or even two. Like I said, their function is to distribute their inventory when the longs return.
If prices were to move lower, they would most likely add to their positions until the LONGS return to buy. Whenever they are trapped and wrong, it’s usually do to an event that is not anticipated and that is always a potential.
Cot commercial longs best play out when the other side is short and sentiment (Green) is bearish. It looks like we have most of those conditions in place. From a seasonal standpoint it would make sense too as this timeframe is usually where the market has its biggest move of the year. But the start date is never the same. The average is actually July 12th in gold. That means a some of seasonal rallies started sooner and some started later. The average window is around July 19th-August 19th when prices begin a definitive move up. Some years (last year) are a complete bust. In fact we got the all time high on Aug 22nd last year and there was NO RALLY until January 2012 started.
The chart below then suggests the market has liquidated a lot of speculative long positions as the correction is almost a year old in gold and longer in silver. So it would make sense that the commercials are holding the bulk of the remaining positions as they were the ones buying the long liquidation.
The key is this---commercials are still going to wait until someone wants to buy them again. That is why this is not a timing device in data. It is however, data that says when the speculators return and start buying, the commercials are not going to give it away at this price. They will methodically sell into a rally until such time they liquidate their longs and if buyers are still moving price up, they will begin to accumulate short positions as they did when silver went to 50 and gold to 1900. Then they were heavily short. The bottom line is that the metals are in commercial hands and that favors a rally, but it doesn’t guarantee one. It’s an advantage and one when played right and the time comes when buyers return, the rally should be a good one. It might be that there is another leg down first. Like I said they are patient on the way down as they were on the way up. So keep that in mind.
What Next?
Odds favor a move to 1598-1607 on Tuesday as Fed speak begins. If the cycle plays out, one final pullback and then the move up to month end. IF WE GO HIGHER FROM here it will have other implications we’ll discuss. For now, we’ll focus on this scenario. Moves above the mini blue line on the hourly chart opens up 1610-1612 and the weekly high where purple and red line meet near 1620.
Bottom line
Support is 1585-1589 going into Tuesday first and maybe 1583. Look for a test of that mini blue line and depending on when it arrives will depend on the ultimate high for the day on Tuesday. And lastly, with the FED speaking, anything can happen.
July 16Scenario for today Elliott: common flat correction up 1601.56 Current rise seems to be over near 1592.70 or 1601.54 for a retracement
towards 1583.86 - 1577.35 area. Supports / Resistances Res 2 1,614.5700 Ex-High 1,596.8900 Res 1 1,601.5400 Pivot 1,583.8600 Sup 1 1,570.8300 Ex-Low 1,566.1900 Sup 2 1,553.1600
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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
