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Monday, January 26, 2015

Gold Trend Jan 27, 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 1312 and 1322. Pullback in play. 
Only close above 1310 puts upside back in play. 
A close below 1247-1255 puts trend in neutral.
Short Term ~ Bullish- A close below 1272-1277 puts the short term from bullish to neutral.

Initial Resistance 1287-1295 2nd tier 1304-1312
Initial Support 1264-1272 2nd tier 1247-1255

The last update listed 1302-1312 as resistance and the high was 1299. 
Support was listed 1285-1295 and 2nd tier at 1262-1272 and the low was 1276.

Gold Overview
Last night’s outlook for price capping just above or below 1300 on Monday played out with a 1299 high. Our pullback scenario based on the FOMC meeting, options expiration and cycles is also playing out and gold reached the first support on listed on the intra-day update (1272-1277) with a 1276 low o Monday. Tuesday support drops down a notch to 1264-1272 and then 1256.
As far as the QE announcement by Europe, one day does not set a trend but we should not have our hopes up too high as the last few QE’s did nothing for gold. If it was money that was going into the economy and being borrowed to stimulate growth, then the results would be different. With that said, if things play out, gold should make one more attempt in February to keep the rally that began in November alive.
The thing to keep in mind in Q1 of 2015 is from a cycle perspective, the highest odds for a high is either Jan 19th – Feb 19th – March 19th (all plus or minus 72 hours). These are the highest odds and not the absolute. So far, we’re getting the pullback on the Jan 19th period.
From a seasonal standpoint over the years, the pullback is usually quick and somewhat sharp but usually reverses higher into February.
As far as February is concerned, the 1217-1227 area would be a strong point for a monthly support low and anything below that would favor the rally from November is complete. At least that’s what it looks like at the moment.
The FOMC Meeting (Lihr Cohen – Trading NRG)
This week the FOMC will convene for the first time this year. In the previous meeting back in December, the FOMC concluded its meeting with the decision to repurpose the term "considerable time" with respect to the timing of the rate hike; the FOMC kept the term as a reference point to its current policy - the normalization process will continue to be data dependent and a rate hike won't happen anytime soon with the key word being patience:
“…the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."
Moreover, in the press conference that followed, FOMC Chair Yellen also pointed out that the FOMC is likely to raise rates in the next couple of meetings.
Here are the results of Gold and FOMC meetings for 2014; (Note – the two times gold rallied was during the early June to July 7th rally of 2014 and the rally from the November low that is currently still in play.

Source of data: FOMC's site and Bloomberg


Fomc results on gold prices in 2014

This time, the FOMC meeting will include a press conference or an update for the economic progress of the U.S. But the last updates by the IMF and World Bank showed that the U.S. economy is likely to grow in 2015 by 3.6% and 3.2%, respectively. In both cases, these organizations revised up their assessments from their previous estimates, in part, due to low oil prices. Something to keep in mind.
Despite the expected higher growth in GDP, the markets have started to revise their expectations about the next rate hike of the FOMC. According to the CME, the probability of a rate hike in the June meeting is currently only 12% - a month ago this probability was around 30%. Further, the implied probability of a rate hike in the July meeting has been updated from 57% a month ago to 28%. So the markets have updated their projections based on the current low inflation.
The low inflation could eventually result in the FOMC pushing forward the first and subsequent rate hikes. Such a scenario could push up the price of gold but in GoldTrends opinion, we need higher rates for gold to really catch a bid. However, the short term is a different story as market participants are under the impression that lower rates are good for gold. That is good AFTER A RECESSION AND CONSOLIDATION has taken place, not before one and especially when they are already near zero.
But the upcoming FOMC meeting isn't likely to stir up the markets considering Yellen's promise not to rock the boat in the next two meetings. Therefore, the market reaction is likely to moderate and GLD isn't expected to do much - we could see a similar reaction as we did in the last meeting.
The one good thing is the FOMC and OPTIONS EXPIRATION WILL HAVE COMPLETED BY TIME WE START TRADING THIS THURSDAY AND that’s close enough to pay attention and look for a turn back up as the short term cycle window will be opening after the close of Thursday trading.

Short Term Gold
Tonight we go back to the zoom in hourly chart. The chart shows the most important line to watch is now the blue dotted up channel as it intersects in the 1272-1277 area with the green 200 hour moving average at 1279. Price spent most of the day trying to hold that 200 hour moving average on Monday. Any break of 1276 should test 1266-1272.
It just so happens that not only is 1272 a weekly reversal number, but it is last week’s low. Look for the market to try and hold 1272 on Tuesday and if it can’t then odds favor the 1266 area. Those 2 price points (give or take a couple of bucks) as the odds favored spots for a Tuesday low. On a weekly basis, 1243-1255 is very strong support and if 1266-1272 doesn’t hold, the 1243-1255 will become the odds favored spot for a low this week. One of those two price area’s are the odds favored low points for this week.
Resistance on Tuesday is 1287-1295, and 1305-1312. The short and intermediate term trend is up but moves below 1272 and a close below 1277 puts the short term trend from bullish to neutral.
In summary, we need to watch the 1266-1272 area on Tuesday. It’s one of the potential spots for a low this week and odds favor it will be the low range on Tuesday. The other area is 1243-1255.
Gold hourly price chart



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YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS 
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. 
 King Regards