LupaCapital

XAU USD - the pathways

Long
FOREXCOM:XAUUSD   Gold Spot / U.S. Dollar
Hello traders and analysts

A Note before reading - this is a technical qualitative analysis - based upon our trading strategy. This is tagged long, due to purchasing further increments upon imbalances. Volume is used on occasion as well as quantitative features - which will be explained.
Please do not take this as face value and conduct the relevant investment strategy to successfully trade the probabilities.

See the SPX or US500 analysis here:

Master Key for zones
Blue = Monthly
Purple = weekly
Red = 4 Days
Yellow = 16 Hours
Orange = Daily
Dark Green = 8 Hour
Grey = 4hour
Pink = 1 hour


Monthly Imbalances
Below are the imbalances which are clearly outlined;

(i) the first imbalance, shows the 2020 low whereby price has retested the zone between 1112 - 1180, the previous imbalance identified is comprised of the Spinning top - while on a monthly body, the evidence is clear here where price will experience a buyer, sellers imbalance - giving the high probability of price closing out sells and creating a high buying imbalance upon the low.

(ii) the second imbalance is between 1447 - 1554 (despite this being a huge range - the reason for this zone is due to the price creating a high of 1554, which price has established - imbalances will be retested and filled successfully . Notice the monthly doji - before the bullish engulfing candle** (see screenshot two) to understand where the imbalance has filled the low closing of the high.
Price reacted and created the buying imbalance - converting the sellers to close out or buyers hedging positions.


** imbalance filling example

(iii) Price then established a high of 2077. XX - 1966 imbalance upon the monthly. This is now the Fibonacci monthly top - or the weekly target using Fibonacci on the extension target for further evidence of the high reaching the target top.
From here though, the imbalance converted the high - to the Fibonacci 38.2*, whilst this is only a confirmation, the real reason for this is price will close out the imbalance at 1673 - which needed filling. This created a pivot point within the market structure to establish further longs.

Now adding the weekly imbalances
Here are the highlighted zones which are where the imbalances have occurred. Notice how these zones align within the monthly imbalances. These are clearly defined as outlined by the second chart. . Whereby price has touched the imbalance low and closed out the wick. This has proved the monthly level imbalances and determines the pivot structure.



Four day, 16 hour is privatised

Daily Imbalances
The Daily levels are shown and on the imbalance wick - before price has created an engulfing candle.
The price shows the target of the range at 198X. XX - this will form a range top before the four day, weekly imbalance and daily imbalance above.
Price will look to leave a wick here for a high towards 1990 where the previous wick high was. This will be needed where the imbalance.

Where gold is heading using trendlines and patterns.
The idea of what price is looking to achieve - using the eight hour chart as a drawing tool.

Cross-asset comparison
Here is the XAU XAG sector index for a cross comparison showing the levels of commodities - showing the rise in precious metals are back with the imbalances.

Weekly overlay of XAU sector index vs XAU

XAU XAG
Here is the chart of Gold and Silver correlation - where price is floating around the 61.8%* Fibonacci retracement .
The reason for using this chart is to fully understand the relationship of the undervalue of XAU XAG against the market sentiment.

Inflation ETF Vs XAUXAG
Here is the monthly chart with the overlay of the Pro Shares Trust Inflation Expectation.

Below is the weekly chart - where 0% interest rates have been applied, since this moment repeating again since 1930's - this is a critical pattern piece of the market to understand.

Attached is the Fred Federal Reserve balance sheet
The monthly chart represents the S&P500 , US02Y and the FRED /WALCL all together.
Notice the cross patterns between 2008/09 and of course with the most recent Pandemic.
A further detailed version of this is .

GBP JPY is privatised

Key
SPX = Orange
US02Y = Light blue
WALCL = Dark Blue

The returns of the US02Y correlation is negative against the SPX & FRED .
Although the SPX is completing the Fibonacci extension - this is a cause for concern.

This is a huge macro-economic shift and is now becoming concerning. For a further understanding, of QE and inflation measures - please do your research on said topics.
To put things into perspective - the Repo market has now created an over supply of cash in the market which has essentially no where to go.. where, the increase of USD at 0% has been part of the asset purchase and drawdowns on the balance sheet causing a Reverse Repo situation. This has not been helped in the slightest by states, and other financial measures providing stimulus onto the end user .

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