Today I want to share with you fully renewed charts with Gold technicals.
Big Picture: Correction
Chart courtesy of Tradingview.com
The monthly chart shows a clear uptrend in the Gold market from $251.95 to $1920.80, which has now been retraced in a small correction. Small, because the Bears could hardly move through the first barrier of the 38.2% Fibonacci level that is below $1283.
The current game is in between the 38.2% ($1283) and 50% ($1086) Fibonacci levels. Half of the market participants are still convinced that the market is bullish and they are keeping their long positions.
Bulls are safe in the long term as far as $889 (61.8% Fibonacci retracement level). But to get there, the weakness hunters should have enough power to break to the upside of the green rectangle that is the threshold of the strongest long-term support.
Even if sellers get there, they should manage to survive the turmoil that will start in this zone down to the $682 level, it's the same experience buyers gained on the way up. I was trading Gold those days and we were really thrilled at the desk with such a crazy $300 round trip swing between $1000 and $700, and trust me it was an adrenaline rush.
Bulls could feel themselves saved only above the long-term resistance located above the neckline of triple tops at $1522. But a freedom breath will be taken only above the peak beyond $1921.
Short Shot: Sellers Are In A Desperate Attempt
Chart courtesy of Tradingview.com
The short-term outlook is mildly bearish, as buyers couldn't break above the first resistance at the $1240 level and now Gold is heading north to the recent low at the $1130 level. But overall this move down should be one of the last based on Gold's weaknesses. The sideways wedge (highlighted in red) consolidation has cooled down with sellers taking their energy. The downside picture looks exhausted as no new yearly lows have been hit and we are still in the area where the 2013 sharp drop has landed.
There are two possible downward stops; the first is the 2014 low at the $1130 level and the next is on the downside of the wedge at the $1083 level. I think we will bounce back off one of these levels.
The best thing is to wait to see how the last support will react and only then think of an entry.
Bulls should be nimble to cross the $1240 level where the first support and the wedge's midpoint are located and to get full control of the ball, they should overtake this year's high at $1308.
So, patience is the name of the game. I will update you in my further posts.
Intelligent trades!
Aibek Burabayev
INO.com Contributor, Metals
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
ASA Gold and precious metals unlimited has a NAV of 11.32
trading today at 9.60 this fund would be a way to get more bang for the
buck when the sector turns.
cefa.com closed end fund assn. symbol ASA
Great article, thanks! Patience indeed!
Dear cferg, appreciate your comment!
Best, Aibek
I hundred percent agree with you.
very nicely presented the chart. all the best.
thanks once again.
regards
Ram Pitre
Dear Ram,
I am honored to get positive feedback from industry professional.
Best regards,
Aibek
Dear Aibek,
Thanks for reply. Your question required to be answered in some detailed as well in different way, as there are many factors linked therewith.
I have not obtained an specific level as for bear face ending signal, just because of after forming initial bottom of $ 251-95 in August 1999, and final bottom of $ 254-30 in February 2001, Long term Bull face taken place, which last for more then 11 years, which was ended after forming a top of $ 1920-84 in September 2011, there after giving triple tops around $ 1800, but failed to cross over or even sustained at that level, in fact that was final distribution zone, ultimately in April 2013 Gold has confirmed and entered in long term bear face.
Well before that happened, in this INO Blog, I had given warning alarm http://www.ino.com/blog/2013/02/poll-at-what-price-would-you-buy-gold/comment-page-1/#comment-154317
So current bear face have furnished period of just around 2 years, and as far as Long term perspectives are concerned, more longer period remains to furnish full bear trend, so even at $ 1030 or $ 970 levels, it will be too early to predict any trend change, until all chart requirements not fulfilled.
However, issue of absolute valuations of US Dollar it self is also quite concerned matter, and if some dramatic change took place, we may have to find out fresh studies accordingly.
Rasesh, my old friend, as always I am very pleased to read your detailed comments with your deep knowledge of business.
And I agree with you in your 2013 comment that 38.2% retracement for this huge growth was too early for purchases.
As I told in my post, we are still in correction but it is not deep enough yet.
Best, Aibek
Dear Aibek,
Greetings of the day.
I am pleased to find your soft and polite reply.
For any analyst, to check and considerer other analyst's point-of view is deemed important, and therefore, I will reconsider my analysis on the basis of your theory, and even will enjoy to accept change in my views, accordingly.
With regards.
Rasesh.
Since long, I am watching Gold Movements, and I think, I was very first to confirm Bear trend, that's too, at the time, when Gold was traded at $ 1850+++ Level. Even there after, at the time of every bounces, which were considered or believed as a Possible Trend Change, I had very clearly point-out continuation of Long Term Bear Trend, and As per my personal view, that predication remains unchanged even as on today.
After crashing $ 1130 Level, we may find panic effects, and Faster free fall up to $ 1030 or even up to $ 970.
Again I would like to repeat that Gold entered in Long Term Bear Cycle, and only some dramatic event or happenings will able to change such situation, otherwise, after $ 1030 or $ 970, Gold will captured a narrow side ways or down ward trend, with a range of nearly $ 30 to $ 50.
Dear Rasesh,
Thank you for your comment, where is the level after which you will change your bearish view?
Best, Aibek