MidasTouchConsulting
Short

Gold - A potential bearish scenario

FX:XAUUSD   Gold/U.S. Dollar
2 months ago
"Bottoms in the investment world don´t end with four-year lows; they end with 10- or 15-year lows." - Jim Rogers            

"The one who wants to protect his fortune doesn´t believe in anything but plans for everything." - Amschel Mayer Rothschild

Although its way too early for confirmation I thought it´s time to lay out a theoretical bearish scenario to make sure we are prepared for everything. In this case gold             would move back towards $1,025 and make new lows..!!! But let me explain:
The 330$ rally since December 2015 has seen an important high at $1,262, an important low at $1,200 and another important high at $1,375. The weakness in gold             since last week´s sell off is obvious. Should gold             continue to slide lower it will very likely find a bottom somewhere around $1,210 - $1,220 followed by a sharp recovery towards $1,295 - $1,300. In that case we would have most of the ingredients for a bearish head and shoulder pattern if gold             fails at the strong resistance around $1,300. If gold             then comes all the way back down to the $1,200 neckline the pattern will get more and more obvious. A break through $1,200 finally will confirm the pattern and activate a price target at $1,025 based on the pattern height of $175.
What would increase the odds for this theoretical bearish scenario?
- Gold             below $1,220 would shift the bigger picture (see Midas Touch Model)
- Gold             continues the current sell off down to the neckline around $1,200
- Gold             does not move back above $1,300 within the next 1-3 months
- Gold             is breaking through the neckline at $1,200 (pattern confirmation)
- Gold             is moving below $1,170 (= retracement larger than 61.8% of $330)
How can we make money in this scenario?
1. Buy gold             around $1,200 - $1,220 and sell into the recovery around $1,295
2. Sell gold             short around $1,295 with a stopp above $1,325 and hold this short-position until $1,025...
As already stated this is a theoretical scenario and should be understood as a backup plan.
a month ago
Comment: Still valid :-)
But one thing that doesn't fit is the volume of the potential right shoulder.. it should be lower than that of the head and of left shoulder. .
Instead we saw the highest volume in CME Gold history.....
A bounce towards $1,275 should start around $1,210 next week... but once we break $1,200 we need to return to this H&S scenario
ice_holly01
2 months ago
Thanks for your analysis and backup plan!
+1 Reply
albertwt
2 months ago
Thanks for the chart Midas.
May I know what makes it bearish next year while the other experts says that it will be bullish after the US election ?
Here it is according to top forecaster http://bloom.bg/2e3WgOF
+1 Reply
MidasTouchConsulting albertwt
2 months ago
please read my newsletter.. http://us2.campaign-archive2.com/?u=782363159fbc9257a5256cdde&id=6dca6e711d&e=99a21d2a2f
The bearish scenario is the backup plan in case gold gets deeper into trouble... so far the bullish view is still the main scenario
+1 Reply
albertwt MidasTouchConsulting
2 months ago
Thanks Florian for the sharing.
Reply
MidasTouchConsulting albertwt
2 months ago
you´re welcome :-) sign up for my free newsletter please..
Reply
albertwt MidasTouchConsulting
2 months ago
I agree with your chart above, so far I believe Gold is being manipulated by the big bankers as described in this article: http://www.gold-eagle.com/article/gold-manipulators-will-be-punished hence the price is now lower.
Reply
MidasTouchConsulting albertwt
2 months ago
I think the next three month will bring more clarity.. Gold above $1325 increases the "new bull market" thesis while gold below $1,200 and especially below $1,170 will shift the odds to "just a bear market rally".. in-between we have to take what the market is giving us..
Reply
f_sirin MidasTouchConsulting
15 days ago
@MidasTouchConsulting, Thanks for the chart. It looks still updated sooner than expected. What would be under 1170 the next stop estimated ? Thanks again.
Reply
MidasTouchConsulting f_sirin
15 days ago
@f_sirin, Looks like we finally got the reversal today.. even though still very shallow...!!! Finally!! Gold should start a rally or at least a sizable bounce... very oversold, lots of divergences, sentiment depressive and CoT probably cleaned..
Reply
MidasTouchConsulting f_sirin
15 days ago
@f_sirin, Problem with the HS pattern is the volume. it doesn't fit this technical pattern... but neckline $1,200 has been broken.. let´s see
Reply
f_sirin MidasTouchConsulting
14 days ago
@MidasTouchConsulting, Thanks a lot following.
Reply
Ideas Scripts Chart
United States
United Kingdom
India
España
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Billing Sign Out