Gold prices have been behaving somewhat bullish this week and while that continues there is ample reason to be just a bit cautious after last nights move to 1298.
The overall structure on the hourly chart still has the downside as the dominant feature. What I mean by that is the last down move in gold on the chart into June 28th still has a higher momentum and impulsive wave structure then the bounce we’ve gotten from the lows. While the move is not choppy, it is overlapping and so we need to stay cognizant that this pattern could still be a counter trend move in what Elliot Wavers call an ABC pattern. If that is the pattern developing here then it would favor that gold is not finished correcting and there would still be at least one more wave lower than the 1180 low. The rally from the low of 1180 to 1260 had a deep pullback to 1200. Now we’ve just rallied to 1300 and the key now going forward is how deep of a pullback from 1300 do we get? That’s the 64K question today. First support is the 1272-1277 area of that dotted yellow trend line. Thus a close above 1272 is still needed to at least maintain that the short term upside has more to go. A failure of that Yellow line where price is at right now would suggest a move back down toward 1220-1240 as the next favored outcome. If that happens it would again continue to “look” of the pattern as “overlapping” and would thus favor this as a counter trend move. The 1304-1314 area is what we have been using as resistance and last night’s 1298 high came within a few bucks. I’ve added a dotted channel line construct to highlight the pattern that is forming. The key really at this point is how far do we pullback? That will go a ways in answering whether this is the real thing or not. The chart pattern at the moment looks a bit ominous and now we have to see if we can hold closes above that yellow channel line. A close above 1272 today keeps things in motion. A close below 1265 on the hourly would tend to favor a pullback towards 1230-1245. In summary, the July period is well known for its choppy action and false starts as price goes back and forth while establishing the seasonal low and build up to a usual rally into September. Right now, the short term trend is up, and price basically arrived at a resistance point earlier today and is now pulling back to see where support resides. Short term cycles are in conflict at the moment as our main short term cycle favors lower into the 22nd of the month but this time frame does allow for inversions to take place where a sharp rally towards 1330 would take place.
Thus the short term outlook while bullish has to be approached with caution. There are a lot of bullish indicators beside price (GOFO lease rates and the US Banks have covered their short positions). But these are more of an intermediate and medium term factors and the short term could ---i say could still peak here and pull back into next week. Closes above 1272 keeps short term prospects alive for higher price so lets see if this yellow line provides support. The FED has maintained its QE position---but keep well in mind that it has not helped gold in the past. In fact, my own personal stance is there has to be real improvement in the global economy to have any chance of quelling the deflationary environment that we are and have been in. So its best to remain careful at the moment.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
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.
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
