chartwatchers
Short

GOLD - 2nd wave next week

FX:XAUUSD   Gold / U.S. Dollar
4226 62 70
This Friday we had day 39 in the 4th daily cycle. It's quite a long daily cycle .
We've reached the 1st level at the end of the 1st wave at the 50 EMA and the blue trendline .
Next week we have to print a DCL with RSI oversold at or near to the 100 EMA . Bulls will have to face with the next big surprise: the blue area is not a bull flag . It's going to break down not to the upside...

The first 3 daily cyle lasted for 25-30 days, this one is already 10 days longer so timewise we have to print the DCL at the beginning of next week (Tuesday or Wed)

Indicators: 10 and 20 EMA is crossing over, MACD very bearish , RSI is heading to oversold...
So this 2-3 days will be really scary for the goldbugs, by the DCL we will loose most of the weak bulls.

So next week I'm looking forward to see price printing a daily cycle low around the red trendline and the 100 EMA (1220-1225).
Don't forget : time is the keyword. (For the following levels pls             check "The bear awakens" post)
Comment: Waiting fir the hourly triangle to break down:
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Comment: We have the same trendline-crawling-story...
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Comment: We entered the 2nd wave today.
I would like to see as price is coming down into the red box by Wednesday.
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Comment: Testing back the triangle?
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Comment: We are deep in the 2nd wave.
Tomorrow or On Thursday we will enter into the red box there will be tha daily cycle low.
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Comment: And here comes the price breaking down the bull flag.
Last hope of the bulls has fallen.
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Is this a good week to pick up DUST?
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chartwatchers PRO LBetterini95
If we don't break down heavily on Monday morning then yes. Then you could buy at the US market open
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Heyy how about from here @124x its going towards 13xx-1400 by June?
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Heyy if 1240 broken gold its about massive sell off... I will sold n all in for targeting 1100 1080..
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I think dxy can't holding anymore 95.40-50... Wait n see this drama... Gold is safe haven even dxy still rise up.. Just look still holding above 1240... Now us dollar will be tanking coming week... Mark my word
+1 Reply
4thewin Sakakikunmakio
i think you might be right, but how do you know?
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Thank you chartwatchers! I'm looking 1279 at 4th. March is the 5th. wave top and looking 1303 at 2nd. May is the B wave. So we have an expanded flat, now we're selling the C wave as an 5 wave impulse. 1180-1190 is the ABC 1.618 target.
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Thanks for keeping us posted Arpi I'm riding with you! Looking forward to this week :)
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Love your work, big fan.

The U.S. banking system the five banks in the United States that each have more than $44 trillion dollars in exposure to derivatives (Totalling around $280 Trillion). Today, the U.S. national debt is sitting at a grand total of about $19 trillion dollars, And unlike stocks and bonds, these derivatives do not represent "investments" in anything. Essentially they are just paper wagers about what will happen in the future.


JPMorgan Chase:
Total Assets: $2,476,986,000,000 (about 2.5 trillion dollars)
Total Exposure To Derivatives: $67,951,190,000,000 (more than 67 trillion dollars)

Citibank:
Total Assets: $1,894,736,000,000 (almost 1.9 trillion dollars)
Total Exposure To Derivatives: $59,944,502,000,000 (nearly 60 trillion dollars)

Goldman Sachs:
Total Assets: $915,705,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $54,564,516,000,000 (more than 54 trillion dollars)

Bank Of America:
Total Assets: $2,152,533,000,000 (a bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $54,457,605,000,000 (more than 54 trillion dollars)

Morgan Stanley:
Total Assets: $831,381,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $44,946,153,000,000 (more than 44 trillion dollars)

Deutsche has a total derivatives exposure that amounts to $75 trillion. That’s about 100 times greater than the €522 billion in deposits the bank has. It is also 5x greater than the GDP of Europe and more or less the same as the GDP of… the world.

When we look at the world GDP along with the worlds assets which totals around $240 Trillion dollars, And the worlds exposure in derivatives $1.6 Quadrillion dollars. These huge numbers are astounding, So having these very large derivatives positions are very dangerous especially when you are looking at investing in the stock market in 2016.

The US FED sold 18000 contracts worth $2.4 Billion dollars to keep gold prices down in MAY. It appears the US FED knows the economy is deteriorating and trying to push gold down to make it appear that the market is doing ok.

+1 Reply
4thewin BlackOp
how do you know the fed did that?
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You have to ask yourself, who benefits from weak gold prices? Whether it be the FED or Banks

Investors typically buy gold when they sense financial danger whether it is a stock market crashes. It’s the ultimate form of wealth insurance. If you look at the S&P500 WEEKLY chart you can clearly see that the 50EMA has crossed over the 100EMA. (I tried pasting the chart but I’m new to tradingview. This occurred in 2002 and 2008, when we had two crashes.) Whether this occurs this time around we will just have to wait and see, especially with exposure it derivatives at $1.6 Quadrillion dollars.

Those pulling the strings behind the scenes are also attempting to prop up a US currency. The goal is to drive gold and silver investors, forcing them to panic sell their positions and accelerate the price decline. Whether theses attempts at smashing down gold prices will prove to be nothing more than a short-term mirage.

The Fed knows that the ability of the US to pay its bills in its own currency is the reason it can stand its large trade imbalance. If the dollar loses the reserve currency role, the US becomes just another country with balance of payments and currency problems and an inability to sell its bonds in order to finance its budget deficits.

However, if inflation is really starting to make a return and that dollar strength starts being driven by inflation concerns, there is a positive story for gold in the longer term,

We will definitely see more of theses sell offs in gold like we saw in May in the future.
+1 Reply
excellent posts... thanks for the insight. :)
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This is quite interesting. Thanx BlackOp.
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chartwatchers PRO chartwatchers
There are definetely 2 great manipulators in the gold market:
1. Governments (Especially USA and China)
2. Big banks - as they are trying to make big money from their insider informations.
And i'm pretty sure that the FED is giving out some info to some of the big banks because alone unable to manipulate the markets. I don't know how China is working but it's more simple for them they do whatever they want with their markets. When SM was falling too much they simply didn't open it. :)
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Smiley8080 BlackOp
Well done, Gold may hit 1300 next week. See Bloomberg.
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:)8080, I doubt that.
I'm watching the charts. Not the news.
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TRADER727 PRO chartwatchers
Soros is buying... amazing how these stories hit when Gold is topping.... I'm with you CW..... dead cat bounce and byby
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piaspa TRADER727
Soros was buying in Q1 (he is probably already out or slowly getting out)
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charlie12 chartwatchers
Do you think this bearish sentiment is near-term or all year? I trapped myself in a gold position, I'm transferring my account.
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1-1.5 month decline only.
Gold is in the bull market already it's just a bull market decline what we will have in the next 4-5 weeks.
This is the first in this bull so it's going to be a tough one.
You have to get prepared for 1100 in the worst scenario (maybe only 1190 but the exact number can't be predicted right now) . Calculate with your account not having a margin call at the bottom.
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Anyway the sentiment is bullish right now. Just the time, COT, cycles, pattern and the indicators are showing that decline is coming.
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charlie12 chartwatchers
Good stuff, thanks a lot man. Hopefully I can get this sorted out tomorrow and find the exit
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Interesting thanks
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Arpi, what is your pullback level for asian session?
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I'm not sure we are going up even 1$ in the Asian session...
Trendline attack is coming again at 1240 in my opinion.
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saint_athur chartwatchers
Ok thanks arpi. I'll watch my price action
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Do you know that you are drawing a larger timeframe chart without the log-scale turned on? Then you would have seen the trendline is not broken down (yet), untill then it is a bullmarket.
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Investors hold investments in gold and silver in one form or another. Whether it is physical bullion, ETFs or other means.

Lets look at something more investors will be more familiar with, “buying stocks”. The number of shares is limited. When an investor buys shares in a company, lets say ”Apple”, they must be paired with another investor who owns actual shares and wants to sell at the prevailing price. That’s straightforward price discovery.

Not so with the futures market such as the COMEX. If an investor wants to buy contracts for gold, they won’t be paired with anyone delivering actual gold. They are paired with someone who wants to sell contracts, regardless of whether he has any physical gold.

The party selling that paper might be another trader with an existing contract. Or, as has been happening more of late, it might be the bullion bank itself. They might just print up a brand new contract for you. Yes, and as many as they like. All without putting a single additional ounce of actual metal aside to deliver.

But those features are barely a factor in setting the COMEX “spot” price. In that market, derivatives are traded instead, and their supply is virtually unlimited. Do you see the problem? The World’s exposure to derivatives is around $1.6 Quadrillion dollars.

If you bet on the price of gold by either buying or selling a futures contract, the seller might just be a bullion banker. He completely controls the supply of your contract.

It can be hard to predict what gold is doing right now by looking at charts. We can let gold drop, and go out and buy psychical gold. Then wait until the market corrects itself sending gold prices sky high. But until then we will get a few more selloffs pushing the price of gold down. If you can’t beat, join them. Let gold drop so it's cheaper for us to buy ;)

I will stick with physical bullion and understand “spot” prices for what they are. $1.6 Quadrillion dollars in derivatives is a lot of money to pay back especially with world GDP around $55 Trillion dollars. Something has to give, if someone can tell me how they are going o pay that large amount of money back, I’m all ears.

Even Warren Buffett said that nation debt ($19 trillion) as a percentage to GDP is a little higher than he would like it but it is not dangerous. Buffet said that national debt in relation to GDP was at 120% in 1945-46 after WWII. You can watch the entire youtube clip which goes for 10mins or skip to 4mins. I think even BUFFET knows that the national debt isn't the big killer, it's derivatives.

https://www.youtube.com/watch?v=uMw0kLNG5F4
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A lot of people think that because gold is rising they have to short gold, they just haven’t figured out why they were rising? (negative economic data) the balance sheet doesn’t add up. Gold and gold stocks will have to revers all those losses. The USD has to surrender all those gains because it shouldn’t have made those gains because it was built on false foundation. Growth and earnings slowing just have to wait and see how much faster these markets move when they finally realise they got it wrong.
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So what is your sentiment? The market is bull or bear? I dont get it
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Bearish
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Please don't post this crap here !!!!! you can doom and gloom somewhere else!!!! where your charts ?
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saif12 PRO TRADER727
tough response, but fully agree with you :)
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In the short run it matters what everyone believes, if everyone believes gold will fall, that’s what will set the price.

Financial markets will respond to economic indicators that tell us where the economy is going. However, GDP is a lagging indicator, when GDP statistics are published, they tell us where the economy has been. So markets are not going to respond to trailing indicators. The aim of the game is to try and understand where the market is going.

"The stock market can be fooled, but not forever".
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After fed william speaking, price bounce back arpi.
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saint_athur saint_athur
Fed expect increase 2 to 3 times rates. I dont understand with the flow. If fed increase the rates, then gold will be drop right?
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It's building into the price now (the rate hike).
They will increase in June it's crystal clear for me.
The next date is too close to the elections. That's why the dollar is rising now.
When the rate hikes come will be in the price the dollar will start to weaken immediately after that.
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chartwatchers PRO chartwatchers
Or one week later when brexit is done.
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xiiimik chartwatchers
Could you please clarify why DXY will decline eventually?
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They are promising the rate hike for 2 years now. The market got only one and most probably one more this summer and that's it for this year. The market will be very disappointed in the second half of this year.
Europe is not so weak as it was before. And everybody is printing money , USA also - just not telling.
Everybody is saying that they are printing money , except the USA.
If you check the weekly chart you can see all of this. We are in a range which is always breaking out to the downside , and making lower lows. I'm 80% sure that we are not going to tag the upper line of the range and 100% sure that we will not break to the upside from this range...
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+3 Reply
BlackOp PRO chartwatchers
I don’t think the FED can raise interest rates at this point. It happened last time in December when the US FED thought the economy had a strong recovery however the US fed had to back track because all hell broke loose. The US had one of the worst starts to the year in the markets and the only reason why the markets reversed is because the US fed reversed their decision.

If we get more of a slow down on the economy how can the FED increase interest rates? The US FED has to do something, I think they won’t raise interest rates because if they do, the market will be in decline whereby the USD will fall and gold will rise. Agree, that when the FED eventually decide to increase interests rates the USD will be in decline, so it will be a matter of when.

(@TRADER727 - The primary purpose is to have an intellectual discussion; a genuine debate that is accessible for traders to read so one can form his/her own opinion)
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It can be bull but not now and not today :) we can focus on bull once price hitting 1990-70
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saint_athur saint_athur
Sorry 1190-70
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Excuse me Sir, but the purpose here is not to have an intellectual discussion re your view of the dynamics of the economy. We here on the CW pages are of varying degrees of expertise, some beginners, some intermediates and experts. All are following certain aspects of the markets and gathering information so that all of us can make better trades. We would be better served if you could keep your commentary focused in that regard. Maybe you could open your own page for economic theories and discussions. Then we would have a place to go to gather that type of information. Thanks
+2 Reply
Teflonjohn907 USSRandolph
precisely...I come to this thread looking for situational updates,i find myself scrolling through an essay of theory crafting without a single chart...granted the content is interesting,just in the wrong thread imo
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xiiimik chartwatchers
Thanks. Understood.
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Economic indicators are showing us and letting us know that there is a slow down in the economy. Look at store closures, stores decline in sales, look at manufacturing.

You want to look at charts TRADER727, knock yourself out.

US Manufacturing PMI Employment Index
https://mishgea.files.wordpress.com/2016/05/markit-us-2016-05b1.png
https://research.stlouisfed.org/fred2/series/MANEMP

US Retail and consumer spending
http://perspectives.pictet.com/wp-content/uploads/2016/05/US-retail-sales-April-2016-550x344.jpg

Retail sales decline points to stock market corrections.
http://i.bullfax.com/imgs/054fa26eee9332781d02ee36f5b21be182c171af.jpg

Retailers: Inventories to sales ratio
https://research.stlouisfed.org/fred2/series/RETAILIRSA

Total unemployment, plus all marginally attached workers plus total employed part time for economic reasons
https://research.stlouisfed.org/fred2/series/U6RATE

Employment level: Part time
https://research.stlouisfed.org/fred2/series/LNS12032194

Motor vehicle retail sales, domestic: 455 (thousands of units) down to 417
https://research.stlouisfed.org/fred2/series/DAUTOSA

CPI index (CPI statics identify that rise in CPI typically denotes rise in inflation)
https://research.stlouisfed.org/fred2/series/CPIAUCSL

Look at layoffs just in 2016,

National oil well 17,000
Wal-mart 16,000 + 154 store closures
Schlumberger 10,000
Intel 12,000
Hallow burton 10,000
Dell 10,000
Chevron 7000
Buffets 6000
Dupont 5000
Weatherford intentional 6000
Beoing 4000 by June
Sears, Kmart 78 store closures.

The list goes on.

Inflation is rising in the US due to increase spending and the way the FED can slow down inflation is to increase interest rates. However this has a negative impact on the economy. So, when the FED finally raises interest rates, banks also have no choice to raise their interest rates as well. So, people will stop spending, prices drop and inflation slows because it cost more money to pay that loan. The problem is that if we look at lets say S&P500 weekly chart you can see the 50EMA has crossed the 100EMA for the third time since the year 2000. the last two times this happened there was a decline in the market. I think the FED acknowledges whats happening and is concerned that if they increases interest rates whether is execrates the decline in the market.

When you look at the overall picture you can make better-informed decisions.
+2 Reply
Sorry "Accelerates" not "execrates".
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They don't want to fight against inflation. They needed inflation. 3 months ago there was a deflation danger in all over the world.
That's why the money printing, that's why they let the rally of the commodity prices (oil, gold, metals).
I think they are raising because if they hike now they will be able to cut at the next recession. But that's years from now.
What do you think they will buy from this "killions " of printed money? Will they put it to the banks for negeative and zero interest rates? No. They will buy stocks, precious metals , oil etc.
So if you prepaing to short the equities than fasten your seat belts because it's entering the last phase into this bull market.


+2 Reply
Victor.Y.F PRO chartwatchers
I absolutely agree with you Chartwatchers! I suppose that before they buy it up there must be a flush out. DXY impulse to the top and a gold final jump.
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Hold the position until the red field or to close the half?
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I will close the half in the red box.
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dizel100 chartwatchers
Ok! Thanks you!
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After the DCL is reached are you going to switch back to long right away? im a bit lost in this gold cycle tbh thought it would drop deeper
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Hey Arpi ! Is it any expected top pullback when hits the red box (1232-1222) ? I draw a Fibo retracement line and .382 hits 1254 and .5 (1263), do you think the smartmoney will get out in action to make it higher or its still too soon and only retailers will try to push it now ? Thanks
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Hi April, I took your advice and bought DUST yesterday. Should I be selling on today's strength and looking to buy back in? I'm a complete noob at this so please forgive me. We appreciate all the hard work you do!
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Cheetsbaby84 Cheetsbaby84
Apri*
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Just reach new low 1233. Thank you arpi. I will hold my position
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Hi Arpi, spot on as always :). Btw are you expecting rebound from 1227 to 1240-50s? (If I am not mistaken 1227 is roughly where the recent rally started) 100% Fib retracement. (I know you prefer to work with moving avarages, but just wondering what you think about this area)
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piaspa piaspa
Btw the 100% fib is from the last move up not the entire rally since January :-) (just so that I do not confuse people)
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We'v arrived to the bottom of the 2nd wave. It was a bit too fast for me. But that1s gold.
Once finds the direction it's unstoppable.
The question are we at the DCL or it has to fall 1 or 2 days more.
I will check the chart today and post.
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chartwatchers PRO chartwatchers
With FIB we have to see the whole rally from january as this decline is the decline of this 4.5 months rally.
+2 Reply
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