Gold has a perfect Bull Flag EQ range ongoing currently on the 4H chart. For the case we see a short break, we will have the previous highs of $1,450, now potentally turned into an S&R zone, or of course, we could look to build higher Lows even prior to that.
For the case of a bullish breakout, we could go into the 2013 S&R zone of $1525-1550, where we definitely will have to expect a big reaction from the bears, since we're gonna be overbought on the bigger timeframes + at this crucial S&R zone at the same time.
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I see the same bull flag, the rectangle range is 1490-1510, because 1490 was resistance on the run up, it was acting support too. range narrowed Friday to about 1495-1505, that’s suggesting reduced volatility after some profit taking. And for the price to remain this lvl 3 days suggest people are looking for the 1550 area before a major correction to 1500. This is what I believe will happen this week. If people were buying gold as safe haven it’s not time to sell yet especially trade wars got worst Except traders, but in my opinion larger buyers like banks and funds outweigh traders.
Edgy_
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@Tekterra, Fully agree, also with the Equilibrium range you' re right, the wicks are going lower. I've seen many colleagues here who have called the short already, but it only gives you headaches if you enter prematurely. Always better to wait for the breakout.
Tekterra
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@Edgy_, China central bank has been buying 8 straight months and by devaluing yuan, they are far from done buying, no telling when they buy more this month especially after the recent additional tariffs. central banks lowering rates around the world also have impact. On the chart it moves lower as volatility dies down after the run, but if no selling below 1490-1495 is a sign the market is simply cooling off allowing rsi to cool off. by then, it’s a signal to the bulls to enter again. It’s logical too. On the initial run up, there is great volatility. Often times market reverse quickly but when market holds a level for days with reduced volatility it is suggesting lower probability for sell off unless bad news comes out as trigger. So now fundamentals will determine the next big move. Fundamentals currently are bullish so probability for continuation is higher.
Edgy_
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@Tekterra, When I was HODling Gold back in 2012, I was completely up to date about the fundamentals. I was getting every CoT report & going through the changes of hedge funds/institutionalas haha. Yeah, unfortunately don’t have the time currently, but yes, the US Chinese trade war had definitely a big effect, that’s why I made an extra video to that.
Edgy_
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@Tekterra, btw, feel free to join our Slack group, happy to have you! ;)
Tekterra
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@Edgy_, I also think we are in a different time now and through time gold moves higher since it’s hard money, and inflation cause fiat to devalue over time against gold. That means the 1500$ lvl today should not be compared to the 1500$ lvl back in the days when we factor in inflation it’s actually still cheap compared to the time back then. I didn’t do any calculations but as an example, 1500$ Today might be comparable to the 1000$ lvl back then. You know what I mean? Cost of commodity goes up over time due to fiat losing purchasing power. To get the exact number we would have to figure out how much purchasing power the usd lost from then til now. We are absolutely going to make new highs if this trade war thing drags on and that global recession chance increases. So to me 1500$ today is till cheap compared to 2011.
Tekterra
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@Tekterra, a better example say cost of goods goes up 2x in 10 years it means 1500$ gold today is about 750$ 10 years ago. So in this scenario, gold is still very cheap.
Edgy_
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@Tekterra, yep, 2x for cost of goods is definitely just an example ;), if you look at the Euro e.g. it has stayed pretty stable. But yes, we have 100% seen the inflation in terms of where the money flow is: So stocks, commodities, etc, here you are right and the same price levels in Dollars of 2011 are not comparable to today.