Finally we got that hell of a bounce on Friday. Closing on daily maximum - as I predicted. We have the DCL in place (30.05.)
Big guys have completely played out retail traders. Why?
- We broke below 28.03 DCL on the 30th May. Everybody and his dog and his wife were shorting the market after Yellen's speech this Monday.
- We had a strong swing next day and a beartrap formed in the breakdown. After the swing is in place the price usually prints one or 2 green candles on the . But that doesn't happen. The trapped shorts seems were not enough. Market had to believe that the swing was false and we are heading to new lows. We could hear in the news that gold is short, Goldman advised gold to short etc. So banks had the time to pick a long position while retail traders were opening short positions. Of course that they knew that the data is horrible. The only thing they had to do didn't let the price pop : " Make them believe and let them short." The reason for divergence between gold and GDX was smartmoney positioning in GDX longs on 02.06. Also the reason that Draghi was neutral because he got the note no need to strengthen the Euro before Brexit poll : US jobs data will do that work...
Though I was right I didn't go long heavily before the data because it was too risky.
So now we see that gold price is heavily determined by the dollar. It's very important to watch the news affecting the dollar:
- June 14-15th FOMC rate hike decision
- 23th June Brexit poll.
Beacuse of the elections FED might not have any other chance to do the hike so I still think we might have it in June. If this is the case Yellen will prepeare the market tomorrow... We see what Yellen says.
The Brexit poll must cause some kind of panic in the Euro so whatever happens at the FED meeting the Euro will have some kind of decline till June 23 and the dollar will rally. If the dollar rallies gold could have a decline.
( I wish I could see the and the blees next Tuesday... That would be a great help. But we will see those datas on Friday only...)
So here is my plan for the next week:
As I'm watching the I don't think smartmoney was positioning on Friday's panic. It seems to me that bears were stopping their shorts and retail traders tried to enter long poistion. Now everybody thinks that June hike is out of the table. "We will rally to new highs." I don't think that's the situation. This decline from 1308 to 1200 seems too thin to me. Intermediate bottoms are not this simple. At the intermediate bottom I would like to see a above average (highlighted in green on the chart) This last DCL's was even small for a DCL.
So tomorrow I will try to sell my XAUUSD positions into the Asian gold rally. (Asia stayed out of the rally so tomorrow the rally will continue but I think the maximum will be around 10-15$.) If I'm right we will have a pop up to 1260-65 $. I'm not going to short just sell the longs... After that I will wait for Yellen's speech if she hits a hawkish tone I will reenter with some short position. I will post in the Metal trade 2 - or open the Metal trade 3.
I set the neckline of the on the chart. If we break significantly above 1265$ the decline below 1200$ is in danger. We will see it next week. The chance for that is below 10%.
May the GOLD be with us !
If we come back above the 10 EM it's bullish for me again.
We will try to break new highs on the hourly.
The March-April data is always weaker. They must raise the rates this summer.
I will be holding gold longs in the follwoing 5 hours, but I might close some positions before her speech, or during the speech.
I'm afraid she might call gold's daily cycle top today. It would mean that we head down to 1200 again.
In the long term they should move in the same direction...