Tuesday, January 13, 2015

Gold Trend Jan 14, 2015

Long Term ~ Bearish-Need a monthly close above 1800 to confirm the bull market 
final phase underway. Need a monthly close above 1560 to neutralize the trend.
Medium Term ~ Bearish– Gold needs to close above 1272 on a weekly and monthly 
basis to neutralize the downtrend.
Intermediate Term ~ Bullish– Resistance is 1238-1255.

Short Term ~ Bullish- Odds favor higher into Jan 19th (plus or minus 72 hours). 
Targets 1238-1242 or 1252-1272.

Initial Resistance 1238-1242 2nd tier 1251-1256
Initial Support 1219-1227 2nd tier 1208-1214

The last update listed resistance at 1238-1242 and the high was 1244. 
Support was listed at 1217-1227 and the low was 1227.

Gold Weakens Late on Profit Taking After Hitting 11-Week High Early On

New York (Jan 13) Gold prices were modestly lower in afternoon U.S. trading Tuesday, on some profit taking from recent gains. However, prices did score an 11-week high in overnight trading. Safe-haven demand amid market jitters related to plunging crude oil prices and chart-based buying were featured during most of the trading session Tuesday, before the profit taking set in February Comex gold was last down $3.80 at $1,229.10 an ounce. Spot gold was last down $5.30 at $1,228.50. March Comex silver last traded up $0.446 at $16.995 an ounce.
Crude oil prices were again lower Tuesday and fell to a nearly six-year low overnight. A United Arab Emirates OPEC minister reportedly said the cartel will not reduce its collective output. Crude prices fell on that news, with February Nymex crude dropping to $44.20 a barrel. Plummeting oil prices are good for consumers at the gasoline pumps, but the markets are anxious due to the potential upheaval that sharply lower oil prices could create. This is prompting safe-haven demand for gold.

The U.S. dollar index was higher and is near last week’s 10-year high.
In overnight news, a report showed consumer inflation in the U.K. was at a 10-year low in December. The steep drop in crude oil prices is blamed for the U.K. inflation reading coming in at up 0.5% in December from up 1.0% in November, year-on-year. Meantime, Greece reported its consumer price index at minus 2.6% in December, year-on-year. Many market watchers are now reckoning the downdraft in crude oil prices will prompt the U.S. Federal Reserve to hold off on raising U.S. interest rates due to the deflationary implications of the sharp decline in oil prices and troubles in the European Union. Economic readings in the EU are already hinting at deflation knocking on the door.
The next major data point coming into focus for traders and investors is the January 22 meeting of the European Central Bank. The specter of price deflation and rhetoric coming from ECB officials suggest the central bank will soon initiate monetary stimulus in the forming of quantitative easing.

The very low inflation in the EU and the likely ECB quantitative easing drove Italian bond yields to record lows Tuesday. This comes despite Italy being grouped in the EU countries that still have major debt and financial problems. Many would agree this scenario is very troubling for the EU.

U.S. economic data out Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly Treasury budget statement, a report from the World Bank on world economic prospects, and the NFIB small business index.

Gold Technicals
We discussed to be cautious at the 1238-1244 level and after making a high at 1244, gold dropped to 1227 before a mild recovery to end the day. It is not out of the question for gold to move to 1251-1261 but with the 1244 area reached, we have to watch what Wednesday presents. Wednesday has the most weekly HIGHS and LOWS of all days. This week’s low is 1217 and the high 1244. If we hit 1250-1260 on Wednesday, odds favor that the high for the week is in place. Even this 1244 area has a chance of being the high of the week. The other side of the coin is gold could pullback into Thursday and then end the short term rally either Friday or by next Wednesday when the short term cycles turn for the month.
The next short term cycle window opens Friday and runs to next Wednesday with the ideal day Dec 19t. That is when odds favor prices peak and then pullback into the beginning of February. This would put us appx 2 weeks from the celebration of the Chinese New Year, which has at times (during the bull run) been very bullish for gold. In any event, the next cycle would lead right into that New Year turn and might be one of the MEDIA catalysts for a mid February price high.

The 1251-1272 area should present a significant attempt by the control boyz to end the January move. It is not out of the question that today’s 1238-1244 target hit we’ve mentioned could be the cap for the week as well.

Odds favor we’ll get a short term peak ideally between Friday and Wednesday of next week with the potential’s being 1238-1244 or 1251-1261 and max projections 1272-1280. Odds are more in favor of the 1st two listed as the highs for this short term cycle.

The Grains really dropped today and the one worry here is CAN GOLD KEEP BUCKING all the other commodities as they plunge?

Perhaps we see a commodity low overall this week on Wednesday/early Thursday morning. That would at least give gold a chance at one more high as the short term cycle arrives near the 19th.

Short term Gold
Since the 1167 low at the start of the year, the choppy and overlapping pattern has stopped and this price pattern has turned impulsive. As long as that remains in play, the gold uptrend from the beginning of November has the potential to reach 1250-1260 or even 1272.
We got the move to 1238-1242 as favored last night with a 1244 print high. Like last night, it is still possible to move up to 1252 (1251-1261). What I’m not sure of on the zoom in chart of the hourly is which line of the upper dual dotted black lines is going to provide the weekly high. Was it today’s at the 1244 high or is it going to be the upper line near 1252 at the end of the week?

Going into Wednesday, support comes in at moving average 1222 so give that 1222-1227 with today’s low as minor support and at the cross line 1211-1215 and at lower 1200-1205. Odds best support point for Wednesday is either just above or below 1222.

Resistance remains 1238-1244 and then 1251-1261. On a final note I’ve added a red moving ADAPTIVE average with two functions. The first is when it’s above the other averages, its another sign of bull mode. The 2nd is to watch when price dips below the red average. That’s when pullbacks (in a strong market) should end if the very short term trend is still up. In sum, odds favor we’ll test 1222 on Wednesday.

What Next?
We reached our 1238-1242 2nd weekly price target on Tuesday and that is a high candidate along with the 1255 area for this week’s high. Resistance will remain 1238-1244 on Wednesday If gold breaks above that then odds favor 1255 (plus or minus a few bucks). Otherwise, we’re probably pulling back into Thursday.

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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. 
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