After the historical decision of the Brits gold printed a terrible rally last week Friday. I wanted to wait what's happening today on the stocks market and at the precious metals . Gold seems to be holding its gains. It seems to me that we are printing a pennant pattern and as stocks are falling price might break out to the upside. The target price counted from the pattern is around 1400$.
Tomorrow I'm going to post a daily chart : we need at least one more day to make conclusions on the daily chart. First of all I'm getting 100% convinced that at 1200$ (30.05.) we printed an Intermediate cycle low and we are in the 1st daily cycle of a new intermediate cycle. So it means there is almost 0 chance that we are going to break below 1200$. The big question is if we printed a half cycle low (half of a daily cycle) on Brexit night or that was an early DCL . If it was a HCL we will rally 4-8 days and we will be heading to the DCL : the low could be around 1260-70. If it was a daily cycle low (DCL) we will rally 20-25 days and then the daily cycle low will be above 1300$.
I noticed in gold these pattern target price prices were working perfectly... So I tend to think that this pennant will work as well. In the HCL case price will run to the green TP area quite fast : in 4-5 days wit hthe falling stock market. In the early DCL case we will have a slower rally in 2-3 weeks.
But I'M quite sure gold is just consolidating right now before the next leg up. And in these moments we are almost tagging the pennant's upper line...
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Nightstar is very true. If stocks keep on falling and the dollar would start its decline nothing will stand in the way of a gold rally. The only thing they will buy will be gold. Now I think the only thing because gold is consolidating is the strong dollar.
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How pattern target prices worked in gold:
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Almost.
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The pennant broke down. If it stays there and we break below the 200 MA on the weekly chart we are moving down to the DCL in the following 5-8 days. That would mean that the pennant is invalid.
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Weekly chart
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I'M afraid the pennant is getting invalid. It depends how the daily close will be. Now it seems that it's a simmetric triangle that broke down. The target price could be around 1275-80$.
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The pennant broke down, almost tested back. So I make the call for today the pennant pattern is not valid anymore. Target prices were working nicely in gold so I think we will start to go down to the daily cycle low in the following 4-8 days. It's hard to tell where this DCL could be the target counted from the pattern is around 1270-80.
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UnknownUnicorn510960
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But why have you suddenly abandoned your COT report analysis, which shows where the big money is... and now you are using just a simple technical analysis pattern?
Commercials are shorting the hell out of gold; last data reported on Friday 24th printed an extreme historial reading: 312137 contracts short!
Maybe you are right and the pennant is right and it goes up to 1400, but commercials have really big pockets and according to the CFTC they can short or long any number of contracts they want (opposing to speculators, that have limits)
I think gold is still a massive bull trap for the following months
chartwatchers
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The problem with COT now that you see only the before Brexit data. (Tuesday data)
We dont know what happened to the commercials on Thursday. This week Friday data will be important last week data is useless now.
UnknownUnicorn510960
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That's true, but even supposing that commercials are less short next Friday, that would be a signal that a bearish move have started (supposing also that gold is lowerer next Friday)
Anyway, I agree next Friday data will be very important, but I still think gold is not going much higher than now
pbartashevich
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Arpi, you can see open interest change for Thursday and Friday. As of Friday it grew to 619,597 with 50,091 contracts created on Friday. So new money pouring into Gold. The record high is 650k. Although, you cannot see if Commercials changed the direction but I can suspect that Large Speculators continue buying. They are already net or not net at the record high levels long. It is all about the news right now. If they will be positive to calm markets then we may not break out. I am just on side lines with Gold until it breaks downtrend line that pushed it back that voting night.Given the COT we have and news already been released we may back off a bit.
Silver open interest is at 217,446 with -1,533 change on Friday.
I hope this can help. And thank you for your ideas!
Victor.Y.F
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I agree with pbartashevich that Large Speculators like SPDR ETFs are buying gold and commercials are balancing them for providing more short contracts. We have a trend now.
Proph1t
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imho dollar not done in short term days/weeks. dollar in sync with gold since brexit (compare dxy and xauusd). it will be some time days/weeks/months before dollar gives it up. check out "dollar smile theory" on google. both gold and dollar are now "safe haven asset" compared to the alternatives. (yes jpy and swissy are also that status, but they not a big enough markets for eu participants to hide in). eventually gold will really really take off over time as dollar continues to get bad economic data for a several consecutive month though. all currencies are in freefall. they only "rise" as a pop compared to each other. this can only end in inflation, but not till usa prints more bills which is sometime after current administration leaves office (post election).
Proph1t
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wait till draghi and carney announce QE and/or stim...dollar is gona go thru the roof and usa equities will dive.
Annette
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USD like safe heaven asset is a possibility to not undervalue...now that Brexit is over, the reaction is what comes next...US is the best option instead of EU and offer a lot more... so much that that pound could prosper not in 10 years but in a ridiculous amount of time ;) fears about a Japanese deflation on the way...
Commercials are shorting the hell out of gold; last data reported on Friday 24th printed an extreme historial reading: 312137 contracts short!
Maybe you are right and the pennant is right and it goes up to 1400, but commercials have really big pockets and according to the CFTC they can short or long any number of contracts they want (opposing to speculators, that have limits)
I think gold is still a massive bull trap for the following months