Wednesday, December 18, 2013

Gold Trend Dec 18/2013

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–A CLOSE BELOW 1220-1222 PUTS price test of 1198-1210 upon us and a close below 1203 favors lower. A close above 1247-1254 favors higher.  
Initial Resistance 1247-1257 and 2nd tier 1266-1272 AND 3RD TIER 1292-1305
Initial Support 1218-1228 and 2nd tier 1203-1210 AND 3RD TIER 1155-1182

Last update listed resistance at 1247-1257 and the high was 1247.
Support was 1218-1228 and the low was 1227.
Gold Overview  
It’s all about the FOMC meeting on Wednesday and the announcement comes right on the ideal day for the short term cycle turn --- DEC 18th.  It’s amazing how many times the FOMC meeting is within 72 hours of our key turn.  Perhaps they look at the same indicator?  LOL
A run of upbeat U.S. economic data, including the latest nonfarm payrolls report and retail sales, have ramped up expectations for the Fed‘s last meeting of the year, and Congress has reached a two-year budget deal.
This could set the stage for Fed officials to consider the first reduction to their $85 billion-per-month bond-buying program. It’s a tough call, as markets have done well.  On our weekly updates, we show the interest rate scenario on the verge of a breakout higher.  The only ammo the Fed will have when the business cycle turns down will be to lower rates. Perhaps they already know the breakout is about to happen and if so, they will make believe their policy is what set rates higher.  They have no control of long term rates, and just go with it.
Some feel waiting a bit longer to make sure the numbers stay strong is the way to go. The one consideration is this will be Bernanke’s last appearance as chairman. Perhaps he might do what is right and if it’s the wrong decision, the new Fed chairman can promise change.
We don’t know for sure as Ben may just discuss the issues around when the right time to pull the switch will be.  When we talk trillions we can assume that 85 billion is nothing in context.  We have discussed “FED SPEAK” as their new and perhaps only tool.  That means that whatever he says, they will change it if they have to, especially with a new Fed boss coming in.
The bottom line is we usually get a SPIKE in both directions to start and then some back and forth and finally a move.  Anything can happen and with the IDEAL cycle date and the medium term cycle ideal date next week --- there is a chance of a big move in gold.  More so than usual but the price pattern and the cycle has left things to go in either direction.  While this may seem disappointing if you think about it, it is MIRRORING exactly the market as it doesn’t know either.  So in a way they are being TRUE in form by being neutral going into Wednesday.
A move above 1247-1251 gives the advantage to the bulls and above 1262 more so.  The 1272 area is key also and the potential for gold to move to the 1292 area---the September low or even 1300 on the upside can’t be ruled out.
On the downside, a move below 1218-1222 favors a test of 1198-1210.  A close below 1222 favors a test of 1203-1210 and a close below 1203 could see 1172-1182 for starters.
With end of the year low liquidity the control boyz can wreck havoc for the remainder of the week.  Combine that with short and medium term cycles --- and with price right at the LONG TERM LINES on the weekly charts and you have potential for a big move.   The problem is direction and how to try and safely play it.  Big swings on both sides beginning at any point can take place.  Interestingly this is an Armstrong panic cycle week on top of it where big moves are much more likely to take place.  IT comes at the culmination of important cycles we watch --- that’s for sure.

Gold Short Term
the pattern is totally neutral ready to move in either direction. What we’ve described above is the best watch we have.  Cycles and price as we view them are neutral ---and that’s the true reflection of the market.  Anything else is conjecture and only 50/50.
On the downside 1203-1222 is most likely 1st support.  The 1218-1222 area is where weekly support has been and 1210 is the December low.  The purple lines are now way towards the 1135-1162 area and a weekly support of 1172 number --- which has the same bearing as 1222 ---1272 and 1322 have meant to us over the past couple of months.
You can see how important 1251-1254 is and look at the times gold has stopped there. Even when it broke above it was reversed.  When a market says can go either way then we report it that way.  We’re just at a major point in time and price and we’re being honest with you.  That’s better than filling you with a story on price that can go exactly the other way.  The chart speaks for itself below.  Do you see a trend there?  If the answer is no its because there isn’t.
gold hourly price chart
A move above 1247-1254 favors bulls. But the CLOSE above 1247 – 1254 will be what’s important.  Sure it could be 1280 by the close but it could also exceed that and turn down just like ITS SHOWN US IT CAN DO OVER THE PAST WEEK.  For traders, we will try and update the signal page as we see it but sometimes it’s just best to stand aside, wait for the close and then try and pick up a position the next day on a pullback.  The market will be here day after day and we must never say “I must get in this market as it’s going to bust higher.”  The last two years have proven that wrong time and again.
What's Next?
With the FOMC on Wednesday, gold is waiting --- as it has been for two weeks.  Ben is leaving and the major cycles are upon us.  IN some ways the market is actually acting normal as it should at a time like this. Be cautious as this thing can SNAP in either direction and on a big move.  If it does, there will be an opportunity on a pullback or a turn to take a position that has a chance.  Let’s see if the market gives that chance.
Bottom Line
THE FOMC MEETING IS NOW WHAT ITS ALL ABOUT.  Lets accept it and try to position ourselves accordingly.  A move towards 1170-1180 could be a buy --- and a close above 1247-1254.  A sell could be a close below 1222 and 1203. Let’s see how they play it.  Sometimes on the sideline is best.  Wait for the train to start moving then get aboard.
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