Guest Post: Gold Technical Outlook: Looks Set For Upside Break
Submitted by Chris Capre of 2ndSkiesForex
Gold Technical Outlook: Looks Set for Upside Break
Looking at the weekly chart on Gold (vs. USD), the sell-off from two weeks ago at the rejection of $1900 was impressive not so much in how much it dropped in a single week, but on how well it recovered. The following act in the next week was a solid weekly gain of 3.4% from an opening price of $1822 - 1864 closing towards the highs suggesting buyers were holding into the weekend and thus not taking profits. The following week was a sell-off but very mild in nature and a third week of price rejecting off the weekly lows. Three weeks of selling and three weeks of strong rejections off the lows clearly communicating to us anytime the shiny metal is sold off, buyers are eager to come back in. And each time, they are doing so with more confidence because every time, they are buying at a higher price suggesting they are happy to take any dips as an opportunity to buy (or invest/hold) more gold.
This clearly communicates the underlying buyers are not afraid of the short term effects CME margin hikes may have on it or their futile (and puerile for that matter) attempts to manipulate something the market clearly wants to have and to hold. If they were afraid, they'd simply wait for a longer or deeper correction but the elevated buying rejections/levels suggests traders and holders appetite has not been satiated and continues to be part of their desired palette.
As a trader and quantitative technician, this all communicates continued upside pressure and a likely breakout (and close) above the $1900 barrier is coming soon to a market near you. We feel whoever is attempting to depress the prices (albeit sovereigns or manipulators alike) will soon have to yield the $1900 barrier and a close above it.
It should be noted that Gold (vs. USD) has only closed down on a weekly basis 13x this year out of 37 weeks (35% of the time). Of those 13x it closed down, only 5x (38%) did it close the following week down. We suspect this week will follow the majority pattern of another up-close on a weekly basis with renewed interest (not like people needed a reason) as a result of the Greek Tragedy (which looks set to bring down the Euro), a Moody's downgrade of France (vis-à-vis Credit Agricole being exposed to €21B+ in Greek Debt) thus adding to the 3,00 reasons people would flock to gold faster than geese flying south after seeing a cold front.
*On a historical note, it does seem ironic that the culture which spawned European and Western civilization seems set to bring it down (at least economically).
We would also like to note the monthly close up/down ratio on a monthly basis has been increasing over the last 7 years from a 50% ratio (2004) to a 75% ratio (2010 and so far for 2011) with the only time the ratio was weakening (2007-2008) where gold only gained 11.4% on the year. After this, the ratio began tightening and is now at its strongest levels in the last 10 years with no sign of this trend abating anytime soon.
We suspect either this week or at best by the end of Sept., we will see a weekly close above the $1900 barrier and this technical break of the highs will only encourage traders and holders another upside run is about to begin. Dips to $1700 should be considered (dare we say) 'golden' opportunities to buy setting short term targets at $1875.
*Authors Note: The last time we wrote an article here on Zero Hedge, there were many comments on how we wrote an article devoid of macro, fundamental or economic reasons to be involved in Gold. Shame on us.
We would like to note this article is simply about providing a technical outlook on what we see happening with the underlying order flow and where trading opportunities are, along with where we see prices going short term. The strategies one has to employ for trading, investing or holding physical gold are completely different and have unique time horizons. For the record, we own physical gold, but also trade gold on a short term basis either daily or weekly.
This article merely attempts to provide a technical perspective on what we see happening in Gold vs. USD over the next few days or weeks and that is all. There are plenty of articles here commenting about the various reasons to own physical gold and hold for the upside gains which we see clearly over the horizon. However, for the trading community, a technical perspective is often useful and is the heart of what this article aims for.
(14 votes)
»
- Login or register to post comments
- 14026 reads
- Printer-friendly version
- Send to friend
Ahmeexnal
If ECB or FED pulls a major paper stimulus, TARP, QE or whatever to fight the debt crisis then:
hmmmmmm..... gold and silver went straight up after last year's QE2 announcement.. with no counter selloff whatsoever@!
I'm not sure why people junked you, but this is the breakdown of the longest and most global fiat run ever, so iti's also the most high pressure trade in the history of mankind, so anything is worthy of discussion.
TPTB can defy reality for a while. You either accept this or you do not. So don't junk my man dlamniac for stating the obvious, ok? You are not looking at physical gold prices each day, you are looking at paper gold prices, and those prices are perched on broken ice. Anything can happen to gold prices because "gold prices" are not priced in gold, they are priced in people who are confident that paper is gold. Do you see the potential avalnche that is building in "gold prices" when it is recognized that gold prices have nothing at all to do with gold?
+ $1850 and green
In the short-term anything can happen. Manipulators can get away with it for a while (tfmetalsreport.com, a great resource for trading PMs).
I do not trade PMs or anything else (tried that, lost money, learned my lesson that Bearings do not make good traders).
When "paper gold" price vs. physical gold price diverge, it will be an awesome sight.
fofoa.blogspot.com
As long-missed ZH-er Gordon_Gekko said:
"Buy.Gold.Now."
He also said:
"All else will be left behind when the Gold Mothership takes off."
And he meant physical!
All civilizations have depended on agriculture for subsistence. Growing food on farms results in a surplus of food, particularly when people use intensive agricultural techniques such as irrigation and crop rotation. Grain surpluses have been especially important because they can be stored for a long time. Thanks a lot.
Regards,
resume help
The name means Jerusalemite mixed grill, and is made of a variety of chicken parts, which may include liver, kidneys, or heart. The meat is grilled and served with a topping of onions and Middle Eastern spices. On December announced that Jerusalem had produced the world's largest quantity of moravia Uncrushable ever recorded. Thanks a lot.
Regards,
Skate Clothing
So true. The ponzi bankers panic and give you a deal at the exact times there should not be one.
extend and pretend
bend and befriend.............baaaaaaaaaaaaaaa
A hair fall is a temporary hairpiece that can be either clipped on to or braided into your actual hair. Dread falls, which look like dreadlocks, can give you more freedom than real dreadlocks, which are difficult to put in and can be removed only through shaving. Buying enough dread hair falls for an entire head of hair can be expensive, so you may want to create your own out of synthetic hair. Thanks for sharing information.
Regards,
thesis writing services
Yeah yeah yeah we all know it already in 2 months we'll be above 2000! Thanks very much Benjamin you old beard :))) !!!!
This post has a shockingly defensive tone to it.
I'm short...see ya at the $1700 dip buying level?
They said it would go back to 14 @ 16.
Here, they can't raise interest rates at all without doing a header off the Cliff of Recession. There, the currency is in open collapse. Asia is an illusion of properous forced labor.
Gentlemen, place your bets ;-)
not going back to 14.
not going back to 16.
currency collapse in progress.
got gold?
From Oct 2010: The Discovery Channel: Inside Gold
Excellent videos MV! Highly recommended to all.
They also said tulip bulbs, tech stocks, and home prices would never go down.
But "they" are always right....until they aren't.
How many other people reading this site are short gold? Or is everyone long and I'm getting junked to oblivion?
LOL!!!...don't worry about junks.
Its a personal choice to be long or short. Knock yourself out...whatever.
I just accumulate...I have all my life.
I'm waaay ahead...if I can remember where I put my map ;-)
I am in nmewn's corner here. I have bought lots over the decades. Small ups and downs don't bother me at all.
Being junked is actually GOOD. It shows that you have pushed a hot button... Better to be junked than ignored.
when ever i head to the big mountains of asia
draw the old lady a map
to where the wealth is buried...
half a dozen x's mark the spots...
recessive pirate gene...
stop at the top...
Sending items from Africa may mean that you don't have easy access to an efficient postal service so make sure you manage your buyers' expectations and let them know how long it will take for their purchases to arrive. Thanks for sharing information.
Regards,
personal statement writers
You're seem to think that gold is in a bubble like it's a fact. That's where you're wrong. And nothing that I can say will change your mind.
Where will gold be next week? No idea.
Where will gold be next year? Higher.
Well we'll let price be the final arbiter. I'm short. I've stated it publicly right here http://tradeonfire.blogspot.com/
Well, I bookmarked your blog. It's very interesting. I'm short Dec. US Treasry Bonds on the CME from 139-23 and having a "spot of bother"; but hanging in there for now. I don't see why the Gold Chart would require any further drop in price; but as you say, the price is the final arbiter. Cheers.
I'll be posting detailed analysis shortly. This blog is kind of something I did on the wing from advice from an acquaintance
I don't think shorting T's are smart at this moment in time, but I wish you the best in that endeavor.
yeah yeah we know, blog on a wing.
humble beginnings pushed forward by insistent family member, or acquaintance, depending on target audience and the depth of ratings week.
Haha, the blog is only gona' be up for a short time.
It is in no way going to be monetized in any fashion....EVER
...depth and ratings are meaningless.
Do I threaten you in some way?
ah so... insert 'noble'
Besides, any pub is good pub.
Bob, good luck shorting gold.
That would explain why your blog will be "transitory": when TSHTF your gold shorts will lead you to your ruin.
I see food stamps in your future.
It's up and running.
checked out your blog. nothing new yet. I don't eat bacon (or any pork for that matter). and I'm not into gay skiers.
you might attract more serious "readers" if you alternate those charts with some boobs.
Please keep the blog up. It will be a good contrary indicator.
Spitzer, if you are up late tonight, FOFOA emailed me that he is putting up an article later.
It is about the Euro. The Euro has been my biggest stumbling block on the freegold idea.
I imagine we will exchange thoughts about that in the coming days...
I just shorted another 5 /gc contracts
Good luck!
No guts no glory- Good luck!
FOFOA's new article is now up!!
http://fofoa.blogspot.com/2011/09/once-upon-time.html
Bob:
It is extremely generous of you to share your adventures. Hopefully your blog doesn't become a permanent record of a rags to riches to rags story! Good luck but not too much since I'm long gold...
...sorry about that
i think people need to be careful here, b/c the USDx is breaking north, or has
from, say 73 to 77 is ~5%, so that takes ~^ $90+^ gold upskie just to stay even, doesn't it?
They assess the need and use interventions for fluency, letter sounds, reading comprehension and the improvement of sight-word vocabulary. One-on-one instruction may be used when needed. Reading interventions are regular, frequent and of sufficient duration to improve reading skills. To become a reading interventionist, individuals follow a career path for teachers and then specialize in reading. Thanks a lot.
Regards,
personal statement service
Short. Leveraged paper. For another day or two, with tight trailing stops. But I'm long the real stuff.
One thing I like about the hard, shiny stuff, it makes it more difficult to trade. So I don't, I just slowly accumulate it. Keeps me smart....
When the ECB cuts rates (and the ECB will cut rates) what is that going to do for the dollar?
Can you imagine an enviroment where stocks & gold drop? Hold onto the bucket tight, while the dollar goes sub orbital.
ZH even did a post on the ECB rate cuts earlier http://www.zerohedge.com/news/jean-claudes-three-straws
And you thought Bernanke was wearing that gold tie because he felt like sardonically whipping himself. Europe will end up being a net seller of gold to the US for those Benjis.
That is such bullshit.
All of this talk of Paulson redemptions crashing the gold price is bullshit. What are the people that sell out of the Advantage fund going to buy ? Probably physical gold. What else ? 10 year treasuries at NEGATIVE 9 SGS yield ?
What are people going to buy that jump out of GLD ? Swiss Francs ?
What are you? A fucking idiot? I know you can read, so you can't be that stupid.
Dollars, dumb shit.
Hey everyone !
bob dabolina has uncovered the answer to the issues facing investors and savers the world over. He has presented a long term investment strategy that will not only save capital but also give adiquate returns for the forseeable future...
Buy dollars !
I don't promise anything. I am just willing enough to be transparent.
Which is more than anyone can say about you and your bullshit.
I DARE you to follow in my footsteps. I highly doubt you have the resolve.
When gold hits the end of its run, very few will take advantage of that situation. I plan to be among the elect and thus I am always extremely interested in the views of anyone who see's some sort of end in site. My bet has always been that it will climb untill either:
1) The gov't gets its act together such that 1st world interest rates are able to rise to 10% or so.
or
2) The public has an orgy-like irrational gold buying mania that drives prices beyond what another 10 years of drunken spending by gov'ts would justify.
I don't see either so am confidant the long term trend will be maintained. Besides the wave charts (which some compare to voodoo) do you have a reason to be calling a top here?
Yep, and when the people who set interest rates ARE the biggest borrowers in the world, then you have a massive incentive to keep rates unnaturally low for an extremely extended period of time. We are not Japan - correct, we're not - our politicians are much less organized and intelligent than theirs. Why is it going to work out better here than it has there? Overlay the chart of the Roman denarius priced in silver from the 3rd and 4th century with the dollar priced in gold. I'm not stepping in front of that. Good luck, Bob. You will lose...
Anderson, Nels, and Council of Social Agencies of Chicago. (1923). The Hobo: The Sociology of the Homeless Man.
methinks "Bob" may be part of the 'early adopter' paradigm.
hey dabolina has his postion and everyone is entitill?-- deserves to have his own opinion and position. Why junk him for that. If au crashes 200 bucks will his 17 junkers come back and apologize to bd? (btw I hope you are wrong bd but let's see what happens)
I for one would be grateful as, on the next buy, that would give me an extra ounce or two. Either way, who cares? Over the long term (17% per annum) adds up. Thank you...
I see that iron sheep and xstop post as if it is as given, and beyond debate or question that au will go up "in the long run." The only item in doubt is what to do about short term volatility. I don't hold that postion at all. In past gold had held the same price for 133 years, In british pounds maybe it did the same for 400 years? Gold could stay the same price for next 100 years, or go down, or something outside the box happens. I ~think~ it will go up too, but I'm not sure. It might go down. (JK about the sheep bro)
No, he gets junked because he's an asshole, not because he's short gold.
Still waiting on his silver to $20 something call by the end of the year.
Gold crashing to $1610? Somehow I can't see that happening, but if it does I'll be on a shopping spree for phsycial.
I have a day job man I cant be glued to my computer to make that trade and be certain of catching it at the right time .
Id rather trust that in this particular case the long is the smart play over time and by passing on the quick buck Ill be rewarded over the long haul .
12 GLD put contracts that end on friday... 160 strike.. we'll see.. but if it does get down there, i'm going all in on Nov calls...
If you followed Jon Nadler, he was still sayiing earlier this year, gold would go down to around 600 to 800 dollars, which is it's rightful value. :)
I wonder how many did listen to him.
Oh, yeah, Nadler and Christian (CPM) are holding a seminar for people interested in metals this week.
OH, I can' just imagine what all they are going to say... "Stay away from Gold and Silver. They will be Crashing soon"! Nadler will be out with a horn yelling..."Don't buy Gold - You will lose all your money".
CME will have a rep there too. Jeez, sounds just like something I would really want to attend.
Link to their little metals seminar of bashing gold and silver to make you afraid of buying it.
http://www.kitco.com/falltour2011/
How much does Kitco pay him to be their Senior Analyst? And WHY?
He is in the employment of JP Morgan who funds Kitco also.
any back up on that? Inquiring minds would like to know>
I'm short...see ya at the $1700 dip buying level?
I'd wait for $1000.
Send me a postcard when you get there chief.
Looks like people on the Kitco forum had listened to Nadler and was waiting for it to drop. What idiots. I have noticed Nadler hasn't been using the 600 to 800 number anymore saying that is where Gold is headed. I have tried to figure out why a company that sells gold and silver would hire and have their main analyst always trying to get people to be afraid of it and not buy it.
Except I do know when I purchased from Kitco in 2008, it took 2 months for me to get my little coin.
I haven't heard anymore about their legal problems of them playing a shell game with gold. I wonder what is going on with that?
GetZeeGold - you took out the Kitco forum link to that conversation, during my posting this comment. That link showed people were listening to Nadler and expecting a drop, even when it was at 1400.
No. When Countries default they either sell their gold or have it seized. This will cause the price of gold to decline as interest rates soar for the "need to be re-organized states." this is true at the mom and pop level as well since the government will start cutting off the benefit checks and thus to eat you'll need to part with your gold.
whatever gold you think will be sold, will need to go to Chavez! Gold to the moon!
Sell gold to buy what ? Confetti ?
Europe might as well sell gold to buy confetti.
When Russia demands gold for gas, burning fossil fuels or paper is the same to keep the sheeple warm.
Oil producers> Got oil?
Europe> -silence-
Oil producers> That's ok poor schmuck. Give us your gold...in advance!
Europe> jawohl mein meister!!
that is the problem..
what to buy .....
long silver
Yes, I eagerly await to see if / how Chavez gets his gold. Make no mistake. "His gold".
Why TF would a sovereign state sell their gold at the same time they defaulted on their debt?
That didn't happen in Argentina's case. The BIS is there to help hide their assets if needed.
.
Big round number.
Wonder, will thousands become like hundreds.
Authors Note:
We have no trading positions on Gold as of yet but own both physical gold and silver sitting nicely in a vault outside the US.
We are though awaiting a technical setup to take a short term trading position going long
FYI
Chris Capre
+10
No question gold is showing strength as you note. From technical perspective, its is currently making a triangular formation (which is actually very close to a bullish ascending triangle but not quite) so it could break on either side. The upside would break to 2050 down side to 1700 as you indicate. So the safest trading point is on a breakout of old high. One could buy at 1700 but need to watch the news around that time so see if further downside exists.
@ Chris Capre,
Smart holding physical. I do not trade anymore, having demostrated total incompetence at trading.
So I just buy the real thing. Outside the USA, good thing.
Asia opens and Nikkei drops 2.3%.
Shit, meet fan.
I think a lot people were expecting a G7 press release before asian markets open.
Does that mean that they have abandonned the can kicking and are now ready for reckoning?
Or they have still not have reached consensus for the next lame gimmick
They sent it to the printer, but it's still in the queue for some reason...
Hong Kong down 3.4%
This means DAX will fall around 6%
And that in turn means DOW will rally 2.1%
Which means the markets mean absolutely nothing.
@spirit of untruth
Joooden spying
Ever since Monday, when The New York Times exposed the reason behind the May 2010 incarceration of FBI linguist Shamai Leibowitz, US and international media have been buzzing with prominent headlines like: “US government spied on Israel’s Washington embassy”. Although these headlines are accurate, they —like the articles themselves— miss the actual story behind the revelations: namely the extent of Israeli covert propaganda operations inside the United States. As intelNews reported in May 2010, Leibowitz, a lawyer with dual American-Israeli citizenship, who worked as a translator for the FBI, was sentenced to right under two years in prison, for leaking classified information. The government disclosed no further information at the time of Leibowitz’s conviction, saying only that he had been jailed for “having unlawfully disclosed classified documents to an unidentified blogger”. Now the “unidentified blogger” has come forward to reveal the details of Leibowitz’s court case, and to defend the former FBI linguist “as an American patriot and a whistle-blower”. Richard Silverstein, a Jewish American scholar, who writes a blog called Tikun Olam, said that Leibowitz gave him about 200 pages containing transcripts of conversations intercepted by the FBI in its monitoring of the Israeli Embassy in Washington, DC. Most of the transcripts contain what appear to be telephone exchanges between staff at the Israeli embassy and outside contacts, though some appear to be the products of eavesdropping of face-to-face conversations conducted inside the Israeli embassy premises. This may be seen as evidence that the FBI’s Operational Technology Division, which is responsible for maintaining interception systems targeting foreign embassies on US soil, conducts extensive monitoring of the goings on at the Israeli embassy.
But knowledgeable intelligence observers will be hardly surprised by this ‘revelation’. Indeed, why wouldn’t the US intelligence community spy on the Middle East’s only nuclear power, and a country which engages in aggressive intelligence collection operations against the United States? What is perhaps more suspicious, is that media outlets are systematically downplaying the very reason why Silverstein chose to come forward with the information. According to the Seattle-based blogger, Leibowitz was “acting out of noble motives”, namely out of “concerns about Israel’s aggressive efforts to influence Congress and public opinion, and fears that Israel might strike nuclear facilities in Iran, a move he saw as potentially disastrous”. An incredulous Silverstein spoke at a forum in his hometown of Seattle on Tuesday, in which he repeated that the “real story” behind his revelations was “buried in yesterday’s New York Times piece”. Sure, US counterintelligence spies on the Israeli embassy in DC. But “what’s more important”, he said, “is what the US spying actually uncovered. What is more shocking”, he continued, “is how the transcripts shed light on the aggressive opinion-shaping activities of the Israeli government and its ultimate goal: war with Iran [...]. They target key opinion shapers and key players in society and use long-term plans to sponsor conferences, ghost-author op-ed pieces, and jawbone members of congress. All together is this image that they really want America to go to war with Iran, or OK Israel going to war with Iran”. The FBI, US Justice Department, and the Israeli embassy have all refused comment on the revelations....How is Richard Silverstein a scholar exactly? And regarding the content of the leaks we have to just go on his historically biased recollections given that he burned all 200 pages of them. Some story....LOL LOL
We were supposed to go to war with iran years ago. They'll attack them and drag us into it. Because they are close to reaching thier goal and anybody pressing towards a goal becomes more and more restless and bends rules and good tactics as they get close to the end.
People were saying months back that Irael will go full retard by around september.
http://www.youtube.com/watch?v=r6QKJs_JKok&feature=related
Turkey knows. Somehow people in egypt know. And somehow someway citizens of israel know. Taiwan's clued in. And Russia and china sure as hell know.
BAN THIS RACIST PIG!!!!!!!!!!!!!!!
I see the "Fucking Pig-Dog Manipulators" ARE AT IT ALREADY. kNOCKED GOLD DOWN ,LIKE $10 DOLLARS IN A FEW MINUTES after trading opened this evening.
PS....
Fuck Goldman Sachs.
Still not seeing any big moves in gold, Euro, or ES.
Will all the news about a Greek BK, ES should be down 25+, Gold should be up $35+, Euro should be a 1.35 or worse.
http://clearstation.etrade.com/cgi-bin/bbs?post_id=9829808
yep gold should be $35, gas should be a nickle, candy bar for a dime... and then Robo woke up...
I agree. The fact gold moved with Friday's confusion shows just how exhausted the gold trade is. It NEEDS a break to vault higher.
all it needs is a sniff or more money being printed and its off to the races...
Its astonishing isn't it?
People still value G/S in depreciating fiats instead of the other way around. I've given up trying to esssplain...not ma problem mang...lol.
i must admit, the gold trade has been quite peculiar lately...i want to buy, i just want to buy lower