Thursday, January 15, 2015

Gold Trend Jan 16, 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. 
Gold price has arrived at the medium term moving averages (1245-1262)
Intermediate Term ~ Bullish– Resistance is 1272 and 1322.
Short Term ~ Bullish- Odds favor higher into Jan 19th (plus or minus 72 hours). 
Targets 1238-1242 or 1252-1272.

Initial Resistance 1272-1280 2nd tier 1298-1306
Initial Support 1247-1255 2nd tier 1238-1242 3rd tier 1222-1232

The last update listed resistance at 1238-1242 and 2nd tier 1251-1256 and the high was 1266. 

Support was listed at 1217-1222 and the low was 1226.

Gold pops as the Swiss Bank stuns the world

Switzerland Just Rang The Bell: The Era Of Central Bank Omnipotence Is Ending
by Bruce Krasting • January 15, 2015

I wrote about the Swiss National Bank being forced to abandon its currency peg to the Euro on 12/3/14, 12/8/14 and 1/11/15. That said, I’m blown away that this has happened today.

Thomas Jordan, the head of the SNB has repeated said that the Franc peg would last forever, and that he would be willing to intervene in “Unlimited Amounts” in support of the peg. Jordan has folded on his promise like a cheap suit in the rain. When push came to shove, Jordan failed to deliver.

The Swiss economy will rapidly fall into recession as a result of the SNB move. The Swiss stock market has been blasted, the currency is now nearly 20% higher than it was a day before. Someone will have to fall on the sword, the arrows are pointing at Jordan.

The dust has not settled on this development as of this morning. I will stick my neck out and say that the failure to hold the minimum rate will result in a onetime loss for the SNB of close to $100B. That’s a huge amount of money. It comes to 20% of the Swiss GDP! If this type of loss were incurred by the US Fed it would result in a loss in excess of $2 Trillion!

In the coming days and weeks there will be more fallout from the SNB disaster. There will be reports of big losses and gains from today’s events. But that is a side show to the real story. We have just witnesses the collapse of a promise by a major central bank.

The Fed, Bank of Japan, ECB, SNB and other Central Banks have repeatedly made the same promises over the past half decade:

Don’t worry! We are here. We will do anything it takes to achieve the stability we desire. We are stronger than the markets. We can overwhelm all forces. We will never let go – just trust us!

The entire world has signed onto the notion that Central Banks are all powerful. We now have evidence that they are not.

The next central bank that will come into the market’s cross hairs is the ECB. Mario Draghi has made promises that he would “Do anything – in any amount”.
We’ve just taken a huge leap into chaos. The linchpin of the capital markets has been the trust in the CBs. The market’s anchors have now been tossed overboard.

Gold Overview

So how big was today and is the above article correct?
The chart below shows that a dramatic event has occurred in the Swiss Franc/Euro Currency market. So you may understand the Magnitude---it’s like gold closing Globex Trading for the day at 1187 and the opening 1 hour later at 961 and trading to 740 one minute later and ending the day at around 865 dollars.

Swiss Euro Crash Jan 2015 on a one minute chart

What does it mean?

I’m not sure yet. But the next chart is gold when they announced the peg. I’m going to give it some thought and try and do some digging this weekend.

On September 6th, 2011 the Swiss National Bank (SNB) was aiming for a substantial and sustained weakening of the Swiss franc after Swiss companies threatened to leave because the rising franc reduced their exports. The SNB would no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB set out to enforce this minimum rate with the utmost determination and it began to buy Euros in unlimited quantities.

Gold high was the exact date that the Swiss/Euro peg started

Short term Gold
The Swiss stunner busted through 1244 like cheesecake. Now we’re going to have to see if the removal of the peg is just as coincidental as the putting on of the peg.
Here’s last night’s refresh:

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.

Going into Friday, support comes in at 1247-1255 and 1238-1242.

Resistance remains 1272-1280 and then 1298-1306. The short term trend remains bullish and it would take a close below 1236 to neutralize the uptrend. In summary, if gold doesn’t stop here, and turn back down, the bears are going to lose the momentum they’ve enjoyed. Most significant is gold is exiting the 2014 downtrend channel.

Now can it hold on a pullback? If yes, odds favor we’re going to move higher towards 1322 and potentially even higher. Lets see what gold does on Friday if it can close above 1256 at the 200 day average and the Elliot Wave (4) the techies are all looking at.

Gold Hourly price chart

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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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