Long Term=Bullish - major yearly resistance 1792-1804 needs to be exceeded on a monthly bass and close above 1840 to resume long term up bull trend.
Medium Term=Neutral - It takes a weekly close above 1694 to turn the trend back to bullish. Resistance 1755-1765(Oct/Nov 2012 Resistance) Support 1500-1550.
Intermediate Term= Bearish--it takes a close above 1612 for neutral and 1627 for bullish.
Short Term=Neutral --- Need a close above 1599 for Bullish and close below 1555 for full bearish.
A close above 1610 would favor 1619-1627
Support and Resistance
(APRILGOLD – Use same number for spot)
Initial Resistance 1593-1603-and 2nd tier 1612-1622
Initial Support 1578-1585 and 2nd tier 1560-1567
Last night’s update listed initial resistance at 1589-1599 and the high was 1592-- Initial support was listed at 1578-1585 and the low was 1575.
CME GROUP RECAP (Chicago Merc Exchange)
An early selloff to new lows for the week and then a late rally took April gold higher on the day, as the market bounced off of a spike low for the second time within a week. Like the last Friday, gold broke hard off of some better than expected US employment day but recovered by days' end. The market had sold off after this morning's release of the weekly Jobless Claims number, which came in better than expected with a drop of 10,000 for the week ending March 9th. The 4-week average has fallen to its lowest level in 5 years. But after falling to its lowest level since Monday this morning, April gold made a significant bounce to higher on the day. Persistent upbeat economic data has been undercutting gold prices, but the market has shown resiliency off of the breaks. A steady decline in the dollar index throughout the morning contributed to the strength in the metals.
Overview
Gold once again maintained its neutrality after testing the upper end or resistance points on Tuesday and Wednesday traveled all the way down to the lower portion of weekly supports by testing 1575. The one change we are noticing is this is now the 2nd time that gold sells off on good economic news but is unable to stay at the lower levels it achieves. So perhaps we’re seeing the beginning of a change for gold. It’s coming at a time when gold usually finds a seasonal bottom so from that perspective it’s about the first thing that gold has shown in a while that a characteristic change might be coming in line with a spring low. The other help was the US dollar finally had a down day also. The biggest thing going on right now and the uncertainty is the managed money is holding the greater portion of the short positions. Thus if the commercial producers or the bullion banks or decide that gold is cheap enough and begin to buy then gold will have a strong move up as the funds will have to cover and that would give gold the impetus to move higher. Obviously the physical market is tight but so far the paper markets still control the price………..for now. It can certainly end quickly but for now we’ll have to see if the Bullion banks try and re-join the short side in the hopes of pushing gold under 1520 and setting off a waterfall. If that’s the plan then they’ll have to go for it now as there probably isn’t going to be a better time. They must also be aware if they fail and both the banks and the funds are caught short then the upside move could be one that has the potential to be a shocker to the upside. The same falls true if they were able to hit the sell buttons below 1520 as that also would temporarily bring on the selling towards 1400-1470 as a potential.
This latest consolidation in the tightest range since Xmas 2010 is a sign that there is a rare equilibrium moment here where the forces of supply, demand, manipulation, and speculation are all coming into play at the 1550-1600 area. Each side has a lot on the table as the battle for control of the market is once again in play as it was at 1675-1700.
It’s possible that gold and silver have completed their correction as the seasonal month of March is here. The best time for that low is the week of March 7th or the 22nd to the 29th. We’ve favored the latter but with the last two weeks of action we can’t eliminate the upside either. Nor can we say it won’t extend longer. The simultaneous rally of the US dollar and the stock market and the selloff in bonds and commodities are suggesting that the money flow is coming from Europe into USA and its parking a lot of the money in the stock market. Right or wrong and whether it’s a set up for a huge move down in stocks or whether the Dow plows to 15000-16000 – it is what is going on at the moment. And it’s very similar to 1926-1928 when the money flows swarmed into USA for basically the same reason it is now and that is the potential for a sovereign debt default.
Gold is not over by any means and still has at least one major leg to the upside that will most likely at least double the price from where we are today. But as long as the potential for a major deleverage event is in the cross hairs, then the pressure can remain in commodities and metal for a while longer.
Overall the chances are high that gold should get a good bounce as it usually does in the April/May timeframe. It’s usually the STRONGEST momentum point for gold. The last quarter of the year is when the LONGEST time frame moves occur, but the 2nd quarter is when the FASTEST moves usually occur for gold and yes the mining stocks also. The only thing that can prevent that from happening would be if the debt/depression crisis develops and escalates during the 2nd quarter of this year as it did in 2008 when gold began its decent in March of that year. Certainly the gold stocks are acting in almost the same manner as then. But the STOCK market would have to join that parade if an event were to play out.
Gold reached the top of yesterdays range pivot 1589-1593 clocking in at 1592 and the weekly was tested (1573) coming in at 1575. Thus WEEKLY price was supported and daily resistance held leaving us in a trade range.
Friday Daily Bull/Bear Pivot Zone = 1584-1588 (Ideal 1586)
Weekly Bull/Bear Pivot Zone = 1569-1573 (ideal 1573)
Gold Spot Chart with Gann Gunner overlay
Spot gold chart
Last night we listed there was one more support line to watch on the downside near 1575 and the Thursday low was 1572.20 in the April Contract. While we made a lower low we also reversed in the same manner as we did when we hit 1560 at the low on March 7th and then again today on the 14th. The odds are getting ready to shift to the upside if we can just get a little more strength now in gold as today looks like a flush out. Of course so did all the other spikes but they couldn’t follow thru. Thus we’ve reached key weekly resistance and support now and it’s time for gold to decide and it should be Friday/Monday. Recently Friday has been deciding so it could develop during London/New York. IT’S POSSIBLE TO GET ONEMORE PROBE to the support line and if we do it’s a consideration for a long trade with a tight stop into next week. If gold can remain inside the red channel lines and get above 1605 then 1613-1620 should come in play next. The bears will try and hold under 1598-1604 on Friday and especially 1600 but if the bulls win then all we’ll need is follow thru to 1620.
In summary it looks like the lows got tested on Thursday and the potential to move higher is in play up to the 1620 area. With the flush out on and the reversal higher it seems the bulls are close to getting the advantage if they haven’t already. The key now is DID THE BEARS LOSE THE BATTLE TODAY or are the bullion banks waiting to ambush us next week?
Gold Short Term Cycles
According to the 35-year seasonal index, gold often drops sharply in the first half of March and then goes into a choppy range in the last half of the month. SO FAR WE’VE SEEN THE OPPOSITE. It’s been a pure chop so far.
The gold window closes after today’s trade. IF we are to remain in the regular rotation then the price has to turn down next week. And it’s going to HAVE TO BREAK DOWN out of the downtrend channel it took so long to forge support in. If it does happen it would definitely be bearish and a good selloff will occur. Otherwise gold is going to cycle invert and price is going to run up towards the channel line of 1620 and probably 1640 and this rotation will be nullified and we’ll be in the inversion.
The cycle inversion scenario
the window for the next short term cycle closes after the Friday trade. It’s possible that we are in an inversion and the new cycle is underway. If so then price should head up towards the 1620 or the 1640-1660 area into the end of March. If we best this week’s high next week it should confirm it and the move could be strong to the upside. On the daily chart we can still move to the 1660 area and be inside the channel supports lower line. Thus it takes a close below 1555 in order to turn the trend down for the next two weeks. We saw 1513-1620 as potential targets on the spot gold overlay and if we look here we see the 34 day Exp moving average at 1612 and the purple upper Bollinger band at 1620 so that price area has credibility and that should be the target if we get above 1600 and should be a 1st target if we get upside.
There hasn’t been an inversion in 7 months and there have only been 2 in the last 17 months. With the medium term cycle due March 22nd – 29th it puts the odds higher than normal that we could very well get one. Cycle inversions usually have big moves associated with them so let’s be ready. Keep in mind that while the odds are higher than normal it’s still not the ODDS favorite and we’re talking about 33% - 35% chance. If we get a large bar move up from here next week the odds will significantly increase.
Gold Hourly Chart
Our best take is that an uptrend channel is forming. Everything is falling into place except for one big item and that’s the short term cycles. This only works if we get an INVERSION. If we don’t then price will fall into the end of the month and that is the one thing that doesn’t fit the puzzle. With today’s reversal everything else seems to be in play. Was today’s spike down and reversal just another set up to rally and then get pummeled again as the bullion banks lie in wait early next week or even Friday? If they join the managed money hedge funds then it’s possible. But if price rallies and the funds have to cover the bullion banks could bide their time and try to short at higher prices once the funds have covered. It’s going to be interesting next week I suspect. Let’s hope it’s finally to the upside. Watch 1598-1600 and 1612-1620 on the upside and 1575-1582 on the downside. Even the 1585-1588 area will be interesting and is where the daily pivot ZONE is on Friday. IF the bears raid again we need to hold that 1575 area or damn near. We won’t rule that out but we think the BULLS WILL BE WAITING there if the bears try it.
What Next?
Now it’s up to price and the cycles on Friday and Monday.
Bottom Line
we can only put the market and pin hole it to the extent we are trying to do. There are no guarantees or absolutes. THE CYCLE INVERSION IS NEEDED HERE for the rally. It’s got about a 35% ODDS. If it comes in the move should be big. If it doesn’t then we have one leg left down into the end of the month.
We all have opinions --- the statistical odds are about 35%. For the first time the charts look like they can do it. If we get above 1600 then the chances go up much more. Now it’s up to price.
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GOLD CURRENT TRADE
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GOLD CURRENT TRADE
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Our Positions
Bought 1Apr Gold on 14/03/2013
Entry: 1580
Stop Loss: 1575
Bought 1Apr Silver on 14/03/2013
Entry: 28.60
Stop Loss: 28.20
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.
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
