Perseus

Updated look on gold - Q4

Long
FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
So my last post regarding where we would catch support (roughly around $1,300) was incorrect.

My main thought process behind us catching support at that level was because I believed $1,300 was a very psychological number. However, it appears that this is not true anymore as we've been over and back $1,300 so often the past 18 months that traders have become numb in relation to it.

My overall opinion of the gold market has not changed. As you can see in my chart, I have pointed out 5 different dips we've had in gold during 2017. It is important not only to note that the corresponding RSI for each of these drops has continued to raise as illustrated by my white line (higher lows on the RSI is a bullish indicator), but also how each of these dips correlate to the US 10Y, and the USDJPY (as these are the two main factors which trade inversely with gold ).

Dip #1: Gold /$1193 - 10Y/2.62 - USDJPY /115.416

Dip #2: Gold /$1212 - 10Y/2.43 - USDJPY /114.308

Dip #3: Gold /$1206 - 10Y/2. 40 - USDJPY /114.459

Dip #4: Gold /$1260 - 10Y/2. 40 - USDJPY /113.502

Dip #5: Gold /$1260 - 10Y/2.48 - USDJPY /114.451

Based on the above analysis, we can see that gold is gaining strength in relation to the two indicators in which it is very correlated with (inversely). This can be argued in the following two ways, (1) - Gold is overvalued relative to the 10Y and USDJPY , and will correct harshly or (2) - Gold is gaining strength relative to both the 10Y and USDJPY , and this strength will continue.

In order to determine which one of the above options would be most reliable, we would have to turn to both technical and fundamental analysis . For me personally, I rely on RSI divergences and although they are hard to time, they more often than not play out well (as long as you managed your positions well). Using this I am under the impression of the second option, that gold is gaining strength relative to the 10Y and USDJPY . Using RSI , it appears fairly clear that we are topping in both the 10Y and the USDJPY , while making higher lows with gold .

For fundamental analysis , I look at the US debt balance, and political tensions world-wide, amongst other issues/topics ( inflation , overvalued SM, etc.). When considering these, I believe from a fundamental standpoint that the outlook for gold is bullish as well.

In conclusion, my overall outlook on gold is bullish . Please do not solely rely on my analysis to trade, as noted above I was incorrect in my last assumption. It is safe to say that no one on here is a perfect trader (albeit some hilariously claim to be), therefore it is essential to do your own research before making any trades. The above is just my opinion, and where my capital will be going. Also, my lack of time spent on TV has been due to me changing firms and unfortunately having my computer screen within the view of the partner at my firm.

Good luck to both those short or long.

Comments

Thank you Perseus! The correlations within UJ, US 10Y yield has been confirmed by Brexit and the hike on Dec. 2017. Something in the market looks like that the US dollar has been replaced by the Japanese Yen is happening. Imagine there's a car down the road which is named US 10Y yield, now we just need to switch the driver from Euro to US dollar. The correlation takes 16 months for changing now. It will be very hard to change it back, before the Br-entrance and the Trump retire. Patience, take profits, catch up on every station, hope you can make most of it.
+2 Reply
Perseus Victor.Y.F
@Victor.Y.F, Agree completely. Patience is key here.
Reply
Wrong again.
Reply
Perseus chartwatchers
@chartwatchers, Pullback $30 and then shot up $100 from my level stated in chart.

Also,

"Please do not solely rely on my analysis to trade, as noted above I was incorrect in my last assumption. It is safe to say that no one on here is a perfect trader (albeit some hilariously claim to be), therefore it is essential to do your own research before making any trades. The above is just my opinion, and where my capital will be going."
Reply
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