Technical Analysis of Gold
- Thread starter DrPepper
- Start date
As the Federal Reserve works with foreign central banks to close its temporary liquidity swap agreements by February 1, the US dollar may continue to rally and pressure gold. Longterm, however, the US government is still swimming in an ever growing mountain of debt and will have to continue to monetize it by buying US treasuries with freshly printed dollars. Other countries, including China, are already decreasing their US Treasury purchases. I also have to think that China is salivating at the declining price of gold and may be buying gold with some of its surplus dollars as the price of gold declines.
The daily trend of gold is clearly down as seen on the attached chart. However, commercial traders are increasing their buying and the market is oversold at support favoring a bounce.
Therefore, the short-term fundamentals (closing liquidity swaps) as well as the downward daily trend favor continued selling, while the long-term fundamentals (debt) and technicals (trading at support, oversold and upward weekly trend) favor a bounce. These mixed signals are leaving me on the sidelines for now. However, if the price of gold and silver continue to decline and if commercial buying significantly increases with the next COT report, I plan to get back into GLD and/or SLV.
The daily trend of gold is clearly down as seen on the attached chart. However, commercial traders are increasing their buying and the market is oversold at support favoring a bounce.
Therefore, the short-term fundamentals (closing liquidity swaps) as well as the downward daily trend favor continued selling, while the long-term fundamentals (debt) and technicals (trading at support, oversold and upward weekly trend) favor a bounce. These mixed signals are leaving me on the sidelines for now. However, if the price of gold and silver continue to decline and if commercial buying significantly increases with the next COT report, I plan to get back into GLD and/or SLV.
that was some "bling" higher today
last minute chinese new yr buying?
positioning into payroll friday and G 7 upcoming ?
beg of month order inflows?
Davos headfake?
or just some ORCAM rebalancing ?
www.fundacioncanal.com/images/261_calendario_imagen.jpg
last minute chinese new yr buying?
positioning into payroll friday and G 7 upcoming ?
beg of month order inflows?
Davos headfake?
or just some ORCAM rebalancing ?
www.fundacioncanal.com/images/261_calendario_imagen.jpg
In reference to the silver chart that was posted, (sorry I don't know how to quote your actual chart), I noticed that we're getting very close to that pattern that you mentioned. Matter of fact, looks like gold is showing the same pattern.
The pattern is long commercials over 50% with oversold stochastics in an uptrending market. For discussion let's say we go long if we take out the high of the first down close day we get.
I agree that the COT commercial index is long and stochastics is almost oversold on the weekly chart indicating a buy (see weekly chart attached), however, I am concerned that we are no longer in an uptrend due to the lower high (LH) made on 1-11-10. Instead of the most recent retracement being simple and smooth, it has been complex. However, the retracement has formed a double bottom at support which may still be bullish. I drew a trend line to show that price has exceeded the lower trend line, but was surprised to see that it appears to have bounced off of the lower trend line! Today may be proven in retrospect to have been a resumption of the uptrend. I like to enter using Joe Ross' trader's trick entry which would have triggered today after exceeding Thursday's high (Friday was an inside day).
However, I am still staying out because of the downtrend on the daily chart. If the recent double bottom holds and price goes on to make a higher low, I will consider getting back in.
