Each week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.
WEEKLY GOLD SERIES (August 20-August 24)
After completing what seemed like a fairly strong week in global markets, I now look back at the daily charts for most futures and realize that overall, things were not really all that exciting. While the Treasuries quietly slipped lower day after day, and the Crude Oil and Stock Indexes maintained their upward bias, the US Dollar, the Euro Currency, and the Precious Metals were overall fairly boring. There were no real breaks above or below the ranges that we continue to be stuck in. I suppose the reason there may have been some excitement in the overall trade last week is that despite the low volume (which hit record low in some markets) there were opportunities to hold positions without fear of the intraday or overnight “stop-hunt” that we all have become so accustomed to. If traders sold Treasury or Yen Futures, or bought Crude Oil, Grains or Stock Index Futures to start the week, they had the first chance in a long time to hold out for the directional move. If traders were involved in the Dollar, Euro, Gold or Silver Futures, the same rules applied but there was much less direction to speak of.
So what are the markets paying attention to overall? I believe the Precious Metals and the two powerhouse currencies (Dollar and Euro) have removed themselves from the global rumor mills and patiently wait for real economic policy to be voted on. In the United States, we have had several consecutive weeks of low volume trading that while normal this time of year, has put a strain on the confidence of those involved. In all fairness, there hasn’t really been any big reason for the sidelined money to get involved in the markets. Even when an important report hits the market in the U.S., traders have to decide whether a decent number is a reason to buy, or whether it is a reason to sell. In normal markets, a good number should invite buying. These days, a good number might give the FED less reason to “accommodate” the markets after their next meeting. But these markets are far from normal.
In Europe over the last several weeks, their markets have been equally as schizophrenic. Each overnight brings another rumor or promise that is later squashed in the United States day session. There are however a few standouts to keep an eye on. Mario Monti made a bold statement suggesting he would do anything and everything in his power to keep the Euro from a total disaster. Last week, his statement was surprisingly backed by Germany’s Angela Merkel. The only issue with these statements is they have since failed to suggest a plan of action. There is a rumor of a “Quantitative Easing” like program being tossed around by the ECB. There is also a rumor that there may be a plan put in place that will not allow any one country’s debt yield rates to rise above a premium over German Bonds. Lastly, it is also rumored that Spain may finally request assistance and receive the bailout funds that are ready to ease their financial pain. The only problem with all of these rumors, is that none of them have been backed with action. When you mix rumors, promises and light volume into the trading equation, you can expect a boring market.
There is a FED announcement mid-week, and since the US Stock Indexes and Treasuries have hit their respective resistance and support, I believe that we will experience a bit of profit taking in quite a few markets that were directional last week. If the FED reports nothing this week, the profit taking may continue for more than just a few days. I still believe that the global markets will set their sights on the Jackson Hole Symposium in September before delivering a long term, directional trade. As far as Gold is concerned, I still believe the long term trend will continue to be up based on the underlying fundamentals and technicals. This week, look for another choppy trade with support levels at the 100 day moving (red line on chart) average at $1609, then the 50 day moving average (green line) at the ever important price of $1600 even. If these levels are violated, the market may target the cross of trendlines closer to a price of $1580. As far as resistance levels are concerned, the chart shows today’s high as the first resistance, based on the two week trendline above. If this level is broken, look for $1630 next, then the 200 day moving average (blue line) in the low $1650’s. Until Gold trades out these levels, traders should continue to take what the market gives them, which are fairly reliable technicals on the daily chart.
Good luck this week in the markets. And please feel free to call or email my office. As a Senior Market Strategist with Long Leaf Trading, I advise customers in the futures markets and welcome any input from fellow traders. I can be reached toll free at (888) 272-6926 or by email at
bb****@lo*************.com
Thank you for your interest,
Brian Booth
Senior Market Strategist
888.272.6926
Sorry George, I replied with your name typed into the available space. As always, you can reach me at (888) 272-6926 or by email at
bb****@lo*************.com
The chart shows a top at 1797 as the 0.00 and the bottom of 1532 as the 100.00 - so are the red horizontal lines showing the fibonacci levels shown correctly?
I apologize Bill. When I set the Fib's, I may have started it from the wrong end. At the end of the day, the prices are still the same, but the 61.80 and the 38.20 may be set upside down.
But what if gold breaks down from here? It would be an epic crash.
Well Junior, if "If's and But's"were candy and nuts, then every day would be Christmas.
For the record, I remain bullish Gold and my trade recommendations have been so since we held $1530 in the month of May. I beleieve the market will target the 200 day average in the short term. If we can close above that level, I will be convinced that holding the Long position is the right thing ot do. If we fail, I wil lbe suggesting that my customers trim some, if not all of their gains. The beauty of the Futures Market is that even when volume is light (like in our current environment) you have the ability to adjust your position at any time based on technicals or fundamentals.
Great report. I agree whole heartedly. I beleive the Gold and Silver are both undervalued and have been quiet long enough. Last week, it was reported that Soros and Paulsen were both stockpiling for their funds, and they are no dummies. When the Precious Metals get stuck in a range for this long, it is a great time to get involved. I think the market is headed up to and through the $1650 mark by the end of September.......and I have already put my money where my mouth is. When I get out of these positions, I will email you and we can talk about doing some work together in a few other markets.
Nice job.
Thank you George. I look forward to hearing from you. Whenever you book your position, please feel free to call me. My eye is on the news that drives Crude Oil from the Middle East and I am also very interested in whether or not the Stock Indexes will hold up on light volume after tomorrows FOMC announcement. Keep in touch.