Thursday, December 12, 2013

Gold Trend Dec 13/2013

Follow The XM Bull
Long Term ~ Neutral - need a monthly close above 1800 to confirm the bull market final phase underway
Medium Term ~ Bearish - Need a close above 1334-1387 to neutralize.
Intermediate Term ~ Bearish – neutral on weekly close above 1272 -resistance 1305-1322
Short Term ~ NEUTRAL– support 1222-1230. A breakout failure on Thursday puts Short term cycles  into Dec18th (plus or minus 72 hours) in big trouble and ready to reverse down  A CLOSE BELOW 1222-1230 PUTS SHORT TERM TREND BACK DOWN---Thursday’s close barely held 1222 – if it doesn’t it could tank.  
Support and Resistance
Initial Resistance 1230-1238 and 2nd tier 1247-1254 (1272 ideal weekly resistance)
Initial Support 1212-1222 and 2nd tier 1192-1203
The last update listed resistance at 1259-1272 and the high was 1257. 
Support was listed at 1244-1250 and 2nd tier 1230-1237---but the price low was 1222----which is the key weekly number but was a 3rd tier support.
Gold Overview
Our only take is the medium cycle is still pulling gold down but the budget agreement in Washington may have given the market room to believe that taper is coming in again. 
The idea that the Fed stimulus is even remotely inflationary is hard to swallow when there is over $2 trillion in excess reserves at the Fed because the banks are not lending
There has been reasoned talk out there about how short the market is and that a big bank has cornered the market on the long side, readying to annihilate the wrong way specs.  We reported the same based on COT reports.
As pointed out by James Mc  of GATA yesterday, they had their chance to do so following the big rally. Didn’t happen. As per the open interest drops, some specs did exit their short positions. But, certainly not the ones entrenched with The Gold Cartel’s orchestrated short, precious metals war campaign.
The bottom line is the Commitment of Traders Report remains extremely suspect according to GATA. The CME put out its warning it could not be sure of the reliability of what was being reported to them for a REASON. Why put out the report in the first place if you are not even sure it is reliable? In what other industry would that be tolerated?
Furthermore, there have been reliable reports to GATA that JP Morgan is trading using offshore accounts, which may be for themselves, or for other accounts … say for the likes of an Exchange Stabilization Fund, etc. This could easily show up as spec short positions and designed to do just that. In addition, the OTC market is supposedly some 8 times larger than what transpires on the Comex. We don’t know what is going on there which might counter the visible Comex positions.
In other news
The Dollar Index turned its daily trend to down, further confirming the recent failure to re-enter the uptrend channel that it lost in September and failed to recapture from the end of October rally into Mid-November and the pullback to 79.87 is final support before an outright bearish downtrend gets elected.  The latter half of October rally in gold for two weeks is the only time gold and the dollar have not followed each other since September. Both have been moving lower and the Euro continues to rally to its upper levels of resistance as more deflationary trends are being witnessed in Europe.
Gold Short Term
We discussed last night my concern for how long gold was hugging the purple line on its pullback and that if we dropped below 1244-1247 that the slope down could get slippery for gold.  We suggested a close below 1230 would not be good and below 1222 would render the move a dud.  Well once we lost 1244 the market just kept dropping and dropping. By time we got to NY the blue line at 1230 was support and then NY sent it to 1222 during the session.  So we got all the price points right --- but they were all the down ones to watch out for.  Gold did close above 1222 but that was it.
The chart shows the breakout above 1254 on the 5th attempt on Tuesday.  Breakouts like this are almost always strong and bullish.  That ‘s why we got concerned last night when gold kept hugging the purple channel line and pulling back for what was becoming too long for such a chart pattern.  Then when we hit 1244 the market tanked.  The failure of a breakout such as this is rare.  Here’s the points that really killed the market with instant sell orders;
4:20 AM 2,081 Feb. contracts sold -$4.20
4:23 AM 2,210 Feb contracts sold -$5.40
6:53 AM 1,872 Feb. contracts sold -$4.80
9:45 AM 2,431 Feb. contracts sold -$2.50
The place to now watch is the 1220-1222 area.  If we can hold that and push back above 1233-1244 then the trend higher into Dec 18th could still play out but we think the odds are not high for that.  If that 1222 area breaks down the next point of support is the blue line in the 1200-1206 area and then the purple channel lines 1180 and 1165.  In summary the short term uptrend has been neutralized and unless there is an immediate turn here at 1220-1222 a break lower towards or under 1200 can develop either Friday or early next week.  Friday has resistance at 1233-1243 and support (if 1220-1222) breaks will be at the blue line first and then the purple lines.  The trend is neutral as price is back into a sideways channel. We have to be above 1254 to favor higher and we must close below 1222 but more importantly below the blue line for a bearish move under 1200 to develop.  
gold hourly price chart
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