Gold Hourly Chart
Gold pulled back to the weekly support of 1440 and has bounced off that number and is trading in the 1450 area. Price got right down to our downtrend channel line and held there. Now it needs to get back above that gold trend line at the 1466 area and climbing.
The hourly chart has first support on Thursday at 1440-1445 at the purple channel line and the green 200 hour moving average. Recall last night we said that was the most important support point for the week and price went right to it and held in that area. In fact we said that the area should extend to 1439-1449 and 1439 was the low.
Additional support is the 1425 area where that horizontal FIB line crosses the chart. That was last week’s resistance that we busted out of. An extreme daily move down that breaks 1439 would find support at around 1420-1425. So far our favored 1439-1449 key point of support has held, but we’ve still got the NFP report on Friday to deal with. That should keep the upside limited to the 1460-1472 area on Thursday. Additional resistance is the weekly number we’ve been using at 1475-1485 and so far it has held through the entire week. In summary, the short term trend is still up. A close below 1425 would neutralize it. With the short term cycle still in pullback mode, that’s possible.
We got the mid week Wednesday low but it was a few hours before the FED fomc announcement and came with low readings in economic reports. We had discussed last night that the next 72 hours would most likely be big and at one point gold was off 35 dollars. We've bounced back above 1450 and keep in mind that the weekly PIVOT is at 1450 and gold has been hovering near it since the first bounce off the lows. We’re not out of the woods just yet as the NFP payroll report is on Friday.
The slowdown that is going on worldwide is now being reported, and that’s a change but also the news is finally hitting about a worry of deflation. That’s the CODE WORD for a liquidity squeeze, something we’ve have discussed now for over three to four months as a growing concern. The media and news have finally caught up with it. They avoid saying liquidity squeeze because the word deflation is scary enough. So if you’ve ever wondered why there’s such a worry about deflation it’s that it can create a cash squeeze which in turn (when it gets acute like 2008) can cause liquidation of markets due to a cash crunch.
Now that we’ve had a good move on Wednesday, Thursday favors a trade range with 1460-1472 on the upside and 1436-1446 on the downside. A move below 1436 opens the door to 1420-1425. With NFP on Friday, I don’t see us getting above 1472 on Thursday. At least the odds don’t favor it. And that’s all we have are odds. There are no absolutes.
The short term trend stayed in the channel on the hourly chart but just by a hair. We have Thursday & Friday to go and next week the short term cycle window for a turn opens up. Odds favor the next cycle to be an up cycle. If we can hold on a few more days of trading perhaps we will hold the short term channel. Regardless, we’re in a pullback short term cycle and so the market is acting normal by pulling back. Thursday should be range bound.
Bottom Line
Gold moved lower and this mid-week Wednesday gave us a low for the week right at what we described as the strongest support for the week. The sell off however was not the control boyz doing this time but weak economic data. That is a SIGNIFICANT shift in gold’s character we need to keep in mind. We used to get good rallies with bad reports, and then it got to just a few days pop. Now we have to be on the watch that we don’t start getting sell-offs. The non farm payroll report favors not being a good report, and we’re worried that gold won’t push up on the news. Worse, what if the report is good? It’s a character change we need to keep watching if it happens again. It would be another subtle hint that things are not good in cash squeeze land.
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TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
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
