Gold - Long term "bullish money" with firm bearish tech setup
I should have written the title as Long term firm bearish, but short term it may consolidate and pull back some.
However I'd like to highlight that even if someone believes in Gold as a long term real money vs indebted and inflated fiat ccys, it is very important when and how you buy, or accumulate it, as despite our views, mkt reaction and technical setup for Price trends can be a lot longer "irrational" (well respecting the markets we should consider Price action always as rational, as markets do not have feelings and memory, only people do... but this is another theoretical question)
Weekly:
- Validation of bearish Ichimoku setup has happened this week. Price broke 1150 key resistance. Chikou Span breaks below past candles and enters into open space ahead.
From now 1150 is a bearish support and a long term strategic turning point, which of course as time passes will come lower with average lines.
- The long term bearish trendline remains vaild
- Heikin Ashi setup is full bearish
Daily:
- Ichimoku setup is heavy bearish, but due to the break and sharp price collapse 4 days ago, price has got too far below equilibrium. Normally after such a move we can see some form of bearish consolidation or maybe even a pull back to supports.
- The same is visible in Heikin Ashi setup: a bearish consolidation has started: after haDelta dropped to extreme low level, with smaller candle bodies following, haDelta started to correct. If you look only the Heikin Ashi candle pattern, you can see that despite yesterday candle had a lower low, its body was already smaller than the previous candle's, and it looks like today candle with even a smaller body and with no lower low confirms the ongoing consolidation.
For a few more days I do not expect Price to reach or break further below 1180-1185, what's more, based on short covering a correction towards 1120+ area is a bit more likely. However long term the charts still suggest Gold can remain under serious selling pressure.
I see a lot of arguments why Gold is a buy, and I also think the fiat ccy systems are doomed to fail. But on the other hand, Gold is not just considered as money, but also as a commodity, denominated in USD if you follow spot Gold (XAUUSD). And while I agree that in the long run as a money it is probably better to hold Gold than any other indebted fiat ccy, it is still important what level and in what sizes you start to accumulate it. If you consider it as a commodity and you compare it to all other commodites, you can still see it still relatively "outperforms" most of the others, which already dropped a lot more than 50 % from their peaks seen a few years ago.
So my conclusions:
1. In the long term it will be a buy - but the long term Price action and chart is bearish now - so it will be a buy when the long term tech setup changes.
2. Short term it may correct up, maybe even to 1140, but playing this counter trend trade is really risky, hard to achieve a 1:2 risk/reward ratio with hgh probability, so even if you play it, you must do it only with 0,5 or even less trade (risk) unit.
3. Patience and trend following aproach is the most important and believe me its payout is the best in the long run! -> less frustration, and ultimately more P/L, more yield. So why sould you always get involved in all swings, in all instruments? Just to get a special (in fact a fake) "feeling" of being right as often as possible? I the long run "being right" doesn't necessarely mean "makeing serious money".
However I'd like to highlight that even if someone believes in Gold as a long term real money vs indebted and inflated fiat ccys, it is very important when and how you buy, or accumulate it, as despite our views, mkt reaction and technical setup for Price trends can be a lot longer "irrational" (well respecting the markets we should consider Price action always as rational, as markets do not have feelings and memory, only people do... but this is another theoretical question)
Weekly:
- Validation of bearish Ichimoku setup has happened this week. Price broke 1150 key resistance. Chikou Span breaks below past candles and enters into open space ahead.
From now 1150 is a bearish support and a long term strategic turning point, which of course as time passes will come lower with average lines.
- The long term bearish trendline remains vaild
- Heikin Ashi setup is full bearish
Daily:
- Ichimoku setup is heavy bearish, but due to the break and sharp price collapse 4 days ago, price has got too far below equilibrium. Normally after such a move we can see some form of bearish consolidation or maybe even a pull back to supports.
- The same is visible in Heikin Ashi setup: a bearish consolidation has started: after haDelta dropped to extreme low level, with smaller candle bodies following, haDelta started to correct. If you look only the Heikin Ashi candle pattern, you can see that despite yesterday candle had a lower low, its body was already smaller than the previous candle's, and it looks like today candle with even a smaller body and with no lower low confirms the ongoing consolidation.
For a few more days I do not expect Price to reach or break further below 1180-1185, what's more, based on short covering a correction towards 1120+ area is a bit more likely. However long term the charts still suggest Gold can remain under serious selling pressure.
I see a lot of arguments why Gold is a buy, and I also think the fiat ccy systems are doomed to fail. But on the other hand, Gold is not just considered as money, but also as a commodity, denominated in USD if you follow spot Gold (XAUUSD). And while I agree that in the long run as a money it is probably better to hold Gold than any other indebted fiat ccy, it is still important what level and in what sizes you start to accumulate it. If you consider it as a commodity and you compare it to all other commodites, you can still see it still relatively "outperforms" most of the others, which already dropped a lot more than 50 % from their peaks seen a few years ago.
So my conclusions:
1. In the long term it will be a buy - but the long term Price action and chart is bearish now - so it will be a buy when the long term tech setup changes.
2. Short term it may correct up, maybe even to 1140, but playing this counter trend trade is really risky, hard to achieve a 1:2 risk/reward ratio with hgh probability, so even if you play it, you must do it only with 0,5 or even less trade (risk) unit.
3. Patience and trend following aproach is the most important and believe me its payout is the best in the long run! -> less frustration, and ultimately more P/L, more yield. So why sould you always get involved in all swings, in all instruments? Just to get a special (in fact a fake) "feeling" of being right as often as possible? I the long run "being right" doesn't necessarely mean "makeing serious money".