BofAML: EUR Has Topped And Gold Will Surprise To The Upside

Tyler Durden's picture


EURUSD has topped out, BofAML's Macneil Curry notes, as the break of 1.3548 confirmed a bearish turn in the medium-term trend, targeting 18-month trendline support at 1.3144. Furthermore, Curry warns, longer-term charts suggest this could be the start of something significantly more bearish - targeting the 200-month average at 1.2187. Despite this USD strength, Curry adds, gold remains curiously bid and could squeeze to $1,399.

Via BofAML's Macneil Curry,

€/$ breakdown

€/$ broke down sharply Friday, closing through key support at 1.3564/ 1.3548 (100d avg and Jan-09 low) and confirming a near term, potentially medium term, turn in trend. We have gone short on the break of 1.3548, targeting 18m trendline support at 1.3144. However, long term charts warn that this turn could be the start of something significantly more bearish, targeting the 200m avg at 1.2187. While more needs to be seen before we can make this call with confidence (a break of the 1.3295 Nov-07 low would increase our confidence), long term interest rate spreads support this scenario. Indeed, the US-GER 10yr spread continues on its well defined widening spread towards 132bps.

€/$ begins its downtrend

€/$ is breaking down. The impulsive decline from 1.3893 and subsequent break of the 100d avg says the trend has turned bearish. The initial target is the 200d avg at 1.3349, but this should be only temporary support before the 18m t/line at 1.3144. 

Weekly charts warns that this is the start of something more

A bigger picture view of €/$ warns that this most recent turn lower (from the Dec-27 high of 1.3893) could be the beginning of a much larger bear trend towards the 200m at 1.2187. To be clear, more needs to be seen (like a close below the 1.3295 Nov-07 low) before we can make this call with confidence, but the potential is there

US-GER 10yr Spread supports a lower €/$

The US-GER 10yr Spread continues on its well defined, long term widening trend. The break of long term channel resistance, coupled with the Head and Shoulders Base targets 124bps/132ps and potentially beyond. This is €/$ bearish

Gold squeeze

Despite the recent strength of the US $, precious metals remain very well supported. Last week we highlighted the bullish potential for Silver, now Gold looks poised to surprise to the topside. A break of the 1270 pivot should be the catalyst for short squeeze higher, exposing the confluence of resistance between 1362/1399

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Mon, 01/20/2014 - 22:41 | 4350268 q99x2
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Sorry this is a Gold post. My comment was on Bitcoin. I get the two confused.

It is NY not Congress that are holding upcoming hearings.

Officials will hold a public hearing Jan. 28 and Jan. 29 at which investors, law enforcement officials and computer engineers will provide insight into virtual currencies. One of the aims is to determine whether businesses accepting or transferring bitcoin should be licensed, which is required of wire transfer services.

Mon, 01/20/2014 - 23:32 | 4350466 Stackers
Stackers's picture

If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Tue, 01/21/2014 - 03:46 | 4350850 Oracle of Kypseli
Oracle of Kypseli's picture

There has been a barrage of gold articles lately all pointing to the upside. From a cynical viewpoint, it seems that either the wise guys have loaded the truck slowly and will be pushing hard upwards or they are setting up everyone for the biggest smack-down ever.

Tell me it's the first and not the latter.

I am staying with the physical already at the bottom of the lake no matter what happens 

Tue, 01/21/2014 - 06:38 | 4350995 GetZeeGold
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Sorry this is a Gold post. My comment was on Bitcoin. I get the two confused.


I got lost on the way to the Beanie Baby convention.

Tue, 01/21/2014 - 07:40 | 4351039 GetZeeGold
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I thought we were a lock.....but who knew the gimp could sing so damn good?

Tue, 01/21/2014 - 08:22 | 4351068 SoilMyselfRotten
SoilMyselfRotten's picture

The banks are amazing at the timing of their releases....smash commencing as we speak

Tue, 01/21/2014 - 09:27 | 4351184 Oracle of Kypseli
Oracle of Kypseli's picture

Even though I posted above about a smackdown or a tear, it's still early to tell. Meanwhile maybe just maybe I can add coins

Tue, 01/21/2014 - 09:29 | 4351192 dark pools of soros
dark pools of soros's picture



seems there will be a run up of gold while btc enters its new mulipulated floor price stage (coinbase gotta sell the idea its a currency afterall)


so look for gold to run up to $1600 this year from what I see..  bitcoin will have to wait till wall street is ready for the big btc fund push so buying on any dips under $800 is pretty wise there



Tue, 01/21/2014 - 10:48 | 4351450 Muddy1
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Gold and silver tumble by the most in a month.  Blame it on "fixing" the London gold fix.  To put it another way, the fix ix in.

Tue, 01/21/2014 - 12:05 | 4351660 Boozer
Boozer's picture

@Stackers - That is one priceless line. 

Mon, 01/20/2014 - 23:36 | 4350474 X_mloclaM
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"[T]here have been a few instances of “forks,” moments when part of the network accepted one new block as valid while another part rejected it and accepted a different block.

These incidents happened for accidental reasons, but a fork could someday be the result of malicious action. It is generally thought that it would be too expensive for a single malicious user (or group of malicious users) to take over more than half of the network; but if bitcoin were to grow significantly in value, this calculation could change."

"The aggregate operating cost of the mining pool is what protects the bitcoin system from an attack (it becomes vulnerable if someone controls >50% of mining resources).

However, unfortunately this is not the case in the actual implementation, and this is a well known vulnerability of the system. Once the mining profits will drop significantly (in about 5-10 years) there will be less miners protecting the system, and it will be more vulnerable to attacks."


"Two computer science researchers from Cornell find that this extensive ecosystem can be undermined and they outline how in a paper that they have posted on arXiv.

The paper, "Majority is not Enough: Bitcoin Mining is Vulnerable," is by Ittay Eyal, a post doc member of the Computer Sciences department at Cornell and Emin Gun Sirer, associate professor at Cornell.
According to the two researchers, "Empirical evidence shows that Bitcoin miners behave strategically and form pools.

“Specifically, because rewards are distributed at infrequent, random intervals miners form mining pools in order to decrease the variance of their income rate.
Within such pools, all members contribute to the solution of each cryptopuzzle, and share the rewards proportionally to their contributions. To the best of our knowledge, so far such pools have been benign and followed the protocol."
The authors wrote that central to Bitcoin operations is a public log called the blockchain where all transactions are recorded. The security of the blockchain is established by a chain of cryptographic puzzles solved by a loosely organized network of participants called miners.

The two researchers present an attack with which colluding miners obtain a revenue larger than their fair share.

'This attack can have significant consequences for Bitcoin," they warned, where rational miners join selfish miners and the colluding group increases in size until it becomes a majority. At this point, they said, the Bitcoin system ceases to be a decentralized currency.'"



Tue, 01/21/2014 - 02:13 | 4350744 philipat
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Here comes fonestar in 3,2,1.....

Edit: Nope, he must have gone to bed early with his Bitcoin records.

Tue, 01/21/2014 - 09:33 | 4351201 dark pools of soros
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ok so let's entertain that it does get decentralized.... so at worst it becomes the hell we already have?


shudder..I guess we should die now since we all are gonna die anyway



Mon, 01/20/2014 - 22:37 | 4350273 TeamDepends
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Squeeze but don't "clinch".

Tue, 01/21/2014 - 01:18 | 4350660 Proofreder
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Clinch is for fighters

You mean Clench

as in azzhole.

Mon, 01/20/2014 - 23:17 | 4350274 Yen Cross
Yen Cross's picture

    I think gold is going higher as well. The next hurdle is the 100 day avg. @ 1284.

     XAU daily chart  

  Looking at the 4-h xau chart you can see the August '13 high(1433) trendline runs right across the top of this current 1180-1267 range.

Mon, 01/20/2014 - 22:37 | 4350275 Keyser
Keyser's picture

If gold holds $1400, it's off to the races... 


Mon, 01/20/2014 - 23:01 | 4350354 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Yeah, 1400.00 is where the fun begins!

Tue, 01/21/2014 - 03:13 | 4350813 Ulterior
Ulterior's picture

1400 is where I dump my losing 2013 longs

Tue, 01/21/2014 - 03:31 | 4350829 Oracle of Kypseli
Oracle of Kypseli's picture

Try to get physical now. It feels better and you may even lose some weight. 

Tue, 01/21/2014 - 03:48 | 4350853 Ulterior
Ulterior's picture

so that I could lock my equity, pay premium and depend on market price? nah..

Mon, 01/20/2014 - 22:59 | 4350339 OC Sure
OC Sure's picture

I don't like the double bottom premise since the second bottom is on much lighter volume then the first. I'd rather wait for a long term down trend line to be broken or see a panic to or below the 1000 level with run-for-the-hills headlines.

Mon, 01/20/2014 - 22:58 | 4350345 seek
seek's picture

Technical analysis is no longer meaningful in this environment, regardless of the fact that I might like the message.

Mon, 01/20/2014 - 23:21 | 4350429 HulkHogan
HulkHogan's picture

technical analysis has never been meaningful. 

Tue, 01/21/2014 - 03:35 | 4350832 Oracle of Kypseli
Oracle of Kypseli's picture

Think of "technical analysis" as an afterthought that makes you second guess yourself.

 Similar to having amnesia and Déjà vu at the same time.

Tue, 01/21/2014 - 06:44 | 4350998 GetZeeGold
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"technical analysis" is hard when they print about a trillion dollars a year in QE.....cause who the hell knows where that is going.


I'm guessing it's going to prop up equities and suppress precious metal.....but it's just a guess.

Tue, 01/21/2014 - 00:30 | 4350586 gdogus erectus
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Technical analysis is still useful if you realize that the manipulators use it for smack down.

Tue, 01/21/2014 - 02:08 | 4350737 Space Animatoltipap
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Technical analysis is always drenched in emotion. This technical analists always deny, which is just another emotion. 

Tue, 01/21/2014 - 05:23 | 4350916 Calculus99
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Seek, I see your point but TA is still good. Just realise how the boys play the game, they KNOW how most people use TA so attempt to fuck them up. So when they're playing their games look to go with them, ie when they get eveyone in, the then get everyone out - that's the time to go with the boys. USE THEM like they're using everyone else.

Mon, 01/20/2014 - 23:13 | 4350396 FranSix
FranSix's picture

i have to agree with the double bottom in gold standpoint, simply because this confirms that trade in options on derivatives have kept prices within a 'volatility smile' configuration.

Mon, 01/20/2014 - 23:22 | 4350434 OC Sure
OC Sure's picture

Do you have another link related to what this is: "trade in options on derivatives have kept prices within a 'volatility smile.'"

I'm not familiar with it and don't see it in the link you provided. Thanks.

Mon, 01/20/2014 - 23:36 | 4350479 FranSix
FranSix's picture

If you didn't see a gold price chart with annotations in elliot wave and a clearly outlined volatility smile, then you  need an account with

All options on derivatives traded on the Euronext expire a couple of days before options expiry and a week before precious metals options expiry.

Remember that bullion is considered forex in terms of derivatives.

There is little time to reel in the sell-side, who are heavily hooked into the line, since expiry of the derivative in vogue (the volatility smile) is within a few months.

Tue, 01/21/2014 - 06:33 | 4350989 samcontrol
samcontrol's picture

that was easy , now I get it !

Mon, 01/20/2014 - 23:13 | 4350397 ultimate warrior
ultimate warrior's picture

Surprise to the upside? Surprise to who you cocksuckers.

Mon, 01/20/2014 - 23:15 | 4350403 Vint Slugs
Vint Slugs's picture

Remind me again:  what was it about that 5-wave bounce from the October low around 1250 that BoA called the start of a big advance?

Mon, 01/20/2014 - 23:23 | 4350438 BadDog
BadDog's picture

My charts tell me that when China doesn't get their gold it's game over.

Mon, 01/20/2014 - 23:44 | 4350496 X_mloclaM
X_mloclaM's picture

In physical gold, it's the Arabs that get or "it's game over" for important oil flows (bear in mind China is a larger consumer, for now and SA knows debt laden economies won't be the VIP customer they once were, now Chinese politics matter), and Chinese buyers just bid up gold on the margin, both for internal use, and re-export westward into India through market channels.

Mon, 01/20/2014 - 23:25 | 4350446 Robert.Paulson
Robert.Paulson's picture

B1Tc01Nz 8147cH3z.

Mon, 01/20/2014 - 23:42 | 4350497 X_mloclaM
X_mloclaM's picture

Exter's coins

Mon, 01/20/2014 - 23:31 | 4350468 TheRideNeverEnds
TheRideNeverEnds's picture

Damn, I though at first the title was Bank of America has topped; shit is up nearly 400% in the past two years.



Mon, 01/20/2014 - 23:32 | 4350476 Yardfarmer
Yardfarmer's picture

gold remains curiously bid? i thought these people studied the COT and a myriad of other sources which would obviate the necessity of such useless, meaningless conjectures. anyone with half a brain...

Mon, 01/20/2014 - 23:53 | 4350525 Obese-Redneck
Obese-Redneck's picture

But don't you really feel bad for all the born again wackos in CO who moved there to be in gods country,? Now they have gay marriage and legal weed, LOLOLOLOL. Oops wrong article

Tue, 01/21/2014 - 00:26 | 4350549 MollyHacker
MollyHacker's picture

4am dump calling with with 75,000 contracts'
$1170 "Take Down"

Tue, 01/21/2014 - 01:32 | 4350680 Central Wanker
Central Wanker's picture

How do you do TA on a printing press? 

Tue, 01/21/2014 - 01:39 | 4350693 shawnmike
shawnmike's picture

In physical gold, it's the Arabs that get or "it's game over" for important oil flows (bear in mind China is a larger consumer, for now and SA knows debt laden economies won't be the VIP customer they once were, now Chinese politics matter), and Chinese buyers just bid up gold on the margin, both for internal use, and re-export westward into India through market channels.

Tue, 01/21/2014 - 02:16 | 4350740 orangegeek
orangegeek's picture

Need to see a close below 1.34 in the Euro to confirm bear trend.


If this becomes the case, the USD will skyrocket and US market indexes should finally head down.

Tue, 01/21/2014 - 04:21 | 4350887 Kirk2NCC1701
Kirk2NCC1701's picture

What part of Gold SIDEWAYS market does ZH not get, or -- more precisely -- refuses to get?

Wake me up when TPTB have "caved" and gold is above $1800.

Tue, 01/21/2014 - 04:24 | 4350889 ebworthen
ebworthen's picture

Harry Dent on Coast to Coast tonight saying some interesting things.

Demographic trends for sure, think he is on the button; but he is bullish the dollar and bearish Gold.

He seems to think the fiat system will survive another round and going "diversified" is safe, or going to cash and buying shit the next dump; dunno if I agree (okay, I don't).

Tue, 01/21/2014 - 04:54 | 4350903 Bananamerican
Bananamerican's picture


Tue, 01/21/2014 - 05:14 | 4350913 lemarche
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