Does anyone trade gold?

[Mercury]

Calling all gold bug!

 

Well I'm not a bug, not sensible for a trader to have any passion for a particular asset but I have been tracking Gold for a low turning point for some time and got it at about 1080 a while ago.  A few days ago I put in another Long at 1233 at the break of a nice little triangle on the hourly chart and am now targeting 1290ish (top tramline pair resistance) before cashing in everything and considering a short then long again at a suitable Fib retrace.

 

It is interesting that Gold jumped in line with Oil and Stock indices after the FOMC but today both Oil and indices are falling back while gold remains bullish (Oil may have a bit more to go in this rally before a drop BTW).  Despite my prevailing view that indices are due a sharp fall (maybe we have just seen the beginning of this?) I also think Gold must retrace for a bit before moving on to fresh highs.  I'm targeting 1400ish region for the end of this current rally, after that, well that's for another time.

 

Here are the charts, would love to get some perspective from others on this.

 

Oh and BTW, Happy St Patrick's day to all!

 



[Welshman]

Nice one!

 

Attached my count for GOLD. At the moment I'm unclear - see chart. Has 5 completed and we're already in the correction? or perhaps that's an Expanding diagonal and Red v has further to go?

 

Like you I'm expecting a correction lower (in the form of a B wave) before a much larger move higher to complete C. My only question currently is has A completed or not? Only future price actio

n will confirm that for me, so I'm waiting patiently for clarification:)

 

[Mercury]

Expanding triangles are always compelling because they are so rare.  I think they mainly form at all time highs when the market goes a bit crazy and that doesn't feel like it is the case with Gold don't you think?  Your expanding formation fits inside my parallel trams, which are obviously very common so my bet is that we see one final hit on my upper tram, or a miss and drop through the lower one to begin the Wb (or W4) descent we both agree on before the final push higher.  So far I have not had a Neg Mom Div and ideally I'd like to see one coinciding with a touch on the top tram to end my longs and swing a short.

 

I suspect the final push up will coincide with a drop in the main stock indices so I will be looking for that correlation as well.  If that is right it could support my A-B with a Wc still to go scenario on the Dow etc.  no doubt there will be some twists to this, as always, as we progress.

 

Safest play here is to wait for the Wb drop to a good Fib level and then go long, if everything else is supporting.  As I'm already Long I need to find a good exit and then I will consider a swing but only if it is set well with other indicators.

 

Gold is very interesting right now as it is the only asset class I trust with a Long (FX not included of course).  However you have to admit Gold is still very highly priced on historic terms so I do wonder about a total asset value meltdown sometime soon, i.e. a deflationary depression.  this is one reason I track Gold closely, if it starts to drop heavily in line with main indices and commodities then there is a major crisis in the offing!

[Guest jamko]

Hi Welshman,

I dont know if this helps at all but Elliot Wave International seems confident that wave A is complete & wave B has begun.

With the consolidation that we have seen in gold recently it is difficult to feel secure with a short position.

I agree with Mercury in regards to being more confident when gold is in a long position.

A further consideration may be the relationship between gold and the USD they most often work as opposite indicators for each other.

Of course this is not to be taken as gospel just an indicator of trend movements.

 

Cheers

jamko

[Welshman]

Thanks for that Jamko,it does help if only to add further caution to any potential trade entry:) I'll wait

 

Interesting re EWI, do you subscribe to any of their services? I completed my EW training with them and found them very good. Must say though from training to action is a very BIG leap:)

[Welshman]

 

Hi Mercury,

re your point about Expanding Ending diagonals - I don't have enough experience yet to agree or disagree but happy to take advice from others that have, so thanks. I'm simply trying to make sense of the structure from 4 and ED seemed to fit to me.

 

However I'm very cautious now and I'll wait to see what transpires over the next few days. Having said that if the high at 1284.6 is breached I'll be watching very carefully.

 

Thanks for your input, appreciated

[Mercury]

And I see your logic absolutely, it's just that I'm wary of the more exotic formations.  I sometime wonder if the EW people use these things to make sense of things that don't fit the normal models.  As for me I go with the KISS principle and if it gets too complex I stand aside and wait until it clarifies rather than trying to make sense of it.  Complex W3-4 moves are the graveyard of traders, as someone once said to me...  Best avoided until things become clear.

[Welshman]

Agreed, I'm waiting......................

[Guest jamko]

Thanks Welshman

Re EWI yes I have access to some of Elliot Wave International's services and even with a reasonable grasp on EW I find that you really have to read it at face value. EWI states that they are not there for specific trade advice as with IG or Saxo where you can recieve particular trade positions but to analyse the market in general leaning heavily on market ( human ) sentiment. To those who use the EW principle it can be used as a very good market indicator as long as you remember that no one is perfect and their reading of a particular market could be mistaken which would be why they have a habit of providing alternative counts to some wave patterns.

This is actually a good thing because they know very well how unpredictable the market can be and are using the principle to provide a viable back up should your trade go pear shaped on you. I have access to pro services currencies which has a section by the editor that provides great insight into how to utilise the information given in pro services.

From training to action IS a very big leap but I have found that as long as you don't get too bogged down in the technical side it can provide some amazingly accurate forecasts to trade with. Patience & perserverance is the key be true to your trading plan and the world is your oyster.

 

Cheers

jamko

 

 

[jbtrader]

Great work guys.

 

My take on Gold is pretty simple.

 

Following a very normal correction it hit the major trend line and reversed to the upside 2 days ago following the Fed announcement.

With the trendline firmly intact I see this as bullish.

 

If we get an inside day today I miay well look to go long on Monday.

 

Cheers,

 

JB..

 

[Mercury]

Gold appears to be in a EW3-4 retrace in a classic A-B-C structure.  Price is now approaching the Fib 38% (Daily chart) of the whole move up from the bottom (assumed at this stage).  Stochastic on the Daily is potentially nearing buy indication.  On the Hourly chart the EWc is nearing conclusion with Pos Mom Div building.  Another leg down, if it hits the Daily chart Fib 38% resistance zone, could present a Long opportunity and that could run up to the 1400 price level to complete the large Daily chart 1-5 (or super large Wa).

 

Even if you don't trade Gold such a surge must indicate stock indices falling right?

 

Here are the charts:

  

[Mercury]

Gold just missed the 38% Fib retrace off the strong recent rally.  A lot of people think we have seen the bottom of the Gold Bear and I have even seen some suggesting a 20-30 year Bull...  Not surprisingly these people are advocates of "The Big Drop", but they are respected money managers so...

 

Anyway, on the hourly chart it looks like the W4 has indeed completed and we are in the early stages of the W5 to complete this first move of the Bull (if true).  A W1-2 up could be done? (another leg down is not out of the question at all here).  With NFP coming up we could easily get movement in Gold.  I see 2 scenarios:

1. We get that other leg down to complete a clear A-B-C to a W2 (with he W4 remaining intact as a turning point at 28 March) and then the next wave rally begins (maybe around the 76% Fib)
2. The market rallies away through my upper tramline.

I plan to take a Long if there is another leg down near the 76% Fib and place a Stop in order above the upper Tramline to catch either scenario.  NFP volatility will play havoc I am sure but if we get a similar response as that seen at the FOMC release then I'd want to be in on this.  I buy the Bull market narrative and this next move should go to the area of 1400 before a major retrace (always another opportunity...)

 

Here is the Hourly chart:



 

[Guest oilfxpro]

Gold does not have enough   volatility for time spent  , spreads are too high  to trade ,compared to  volatility  offered for spread paid

[Mercury]

Really!  I make quite a lot of money trading Gold, but then again I am a long term or swing trader and not a day trader.  If you spot a good entry, like the bottom of the market at 1050 a while back, which I did, and then ride the wave there is a lot to gain.  Of course it depends on how big your stake is.  For me there is nothing more satisfying (and financially rewarding) than getting onto a long trend early and letting it ride (doesn't take much time at all).  Depends on you trading strategy and management style I guess.

[Guest Condor]

Thanks  for your solution to my topic.. will follow/input here for the Gold opportunities.

[Mercury]

No worries, welcome to the Gold bug club...

[Guest Condor]

well now I've got some skin in the game - just bought June 1250 Call

[Mercury]

Interesting!  I have a stop in Long order at 12.45, just above the 30 March high.  This is to catch any sudden break out move above the current price action.  The Daily chart presents a bullish outlook to me in the medium term but currently I believe we are in a EW3-4 retrace but had it ended or does it still have a bit to go?  Ideally I'd like to see a hit near the 38% Fib and a Pos Mom Div but the Daily chart does paint a positive picture.

 

On my hourly chart there has been a break of my upper tramline, normally a signal for a trade but this time I feel it may be a fake signal so I'd want to see a break of the recent highs to be sure.

 

I'm hoping for a further drop to a fresh low on this retrace that will offer a good Long entry but if it breaks away I have my stop in order above to catch what I think will be a strong move up to the 1400 minimum area.

 

Charts:



[Mercury]

Gold has just come back inside my tramline pair so it does look like it was a fake breakout!  This is coinciding with the expected rally on US stocks.  Stochastic and RSI have dropped back down from overbought so we could get a decent run down from here.  However I'm staying with my Long strategy rather that trying a cheeky short.

[Guest Condor]

Yep agree just doubled my initial Gold contract as the price of going long fell.

 

The US500 has started dropping again as you note after the initial lift up.

[Mercury]

I've been stalking a trade in gold for some time, all through this consolidation move after the strong rally.  There is now some indication that gold is about to go on another rally and this would tie with a drop in stock indices etc and increased market jitters.

 

I would ideally prefer to see the W4 retrace get back to the 38% Fib on the Daily chart, and that could still happen of course but the hourly price action is compelling with a double break of the resistance upper tramline.  Because I am still a bit fearful of a drop back to the 38% Fib I have set a stop in order above this mornings high to catch any break out.

 

Charts:



[Mercury]

Well that happened fast, as I was posting I think...  To me this break of the upper tramline is suggestive of a strong rally.  There may be a brief retrace but my view is that any retrace back down is a buying opportunity.  Next stop 1400...

 

Now I'm wondering if this plus the direction of the Yen is suggestive of those market jitters I was talking about (or maybe hoping for...)

[Guest Condor]

Hoping for /reading in the tea leaves... you would reckon Gold and (new to me) Yen must be considered safe havens in difficult times.  Yen strength against dollar and what seems ridiculous Yen Bond Yields(and Bund Bond yields too) must mean something? ..and you'd reckon it would be a lot of players switching from another asset class , cash?  This must translate into Equity Asset class switch too at some point..... ideally this afternoon/evening please

[Mercury]

None of this is a mortal lock and I don't make trading decision off this kind of thing but I do like to have a backdrop narrative that makes sense, at least to me, and I also do think the various markets are all connected in some way.  For instance:

 

Gold is sometimes seen as a commodity and sometimes as a currency hedge.  Is it really a commodity, you can't do much with it from an industrial point of view except jewelery.  Is it a currency?  Maybe in times of dire inflation etc.  Anyway traditionally gold does well when other asset classes are falling and in uncertain times.  Having said that it fell along with pretty much everything during the credit crunch stock market crash.

 

What about Gilts and T-bills (government bonds)?  Again seen as a "safe" investment but these days the yields are so low, in some cases negative coupon, that one would only invest on the expectation of either massive turmoil in other asset classes and/or the price of gov bonds going up.  And they have been going up in price, just look at the yield curves for, say US 10 year T-bills.  However there is some evidence that this trend is set to change (i.e. yields up and price down) and some commentators think a bond crisis will lead the next market crash...

 

I wont talk about corporate bonds because they are no longer really safe due to the junk bond manipulation of the late 80s (read a book called Liars Poker if you are interested in the Black Monday crash, mind you the bond traders made out like bandits during that, which process the point about a flight of capital into bonds, unless there is also a bond market crisis (****!  Armageddon!))

 

Other traditional "safe havens" in times of turmoil are the USD and the Yen.  This can come about via currency exchange or selling off of other assets into cash.  The Nikkei has taken a hammering of late and has been a market constantly tipped for investment because of BoJ accomodative stance (so-called Abenomics) so perhaps no surprise that the Yen is stronger but also the Yen got stronger on the last round of BoJ easing, which is counter to "Fundamentals" because they were trying to devalue the Yen but actually cause the Nikkei to drop.  So did the Euro BTW, go figure...

 

Of late, when the S&P500 goes down the USD goes up against everything except the Yen and this recent correlation (and it is not always the case mind you) also coincided with a strong rally in Gold.

 

So for me at least the net of all that is a strengthening Yen, USD and Gold and deteriorating gov bond yields = scared investors and a drop in stocks and other currencies.  The only change to that is bond yield could go up with associated price collapse, which triggers stock market crash...  And the reason for all that (the narrative if you will) is that globally there is just too much debt out there to ever be paid back.  The system needs a reset!

 

Happy days!

[Mercury]

Quick up date on Gold, after a nervous moment on Friday when I thought it might collapse back down Gold rallied overnight to resume its upward trajectory and, for me, confirming my earlier assessment of a resumption of the Bull move.

 

Looking at my hourly chart you will see a number of distinctly bullish factors and all of the green circled events were good trading opportunities for me.  If I'm right that the market has just entered a Wave 3 of Wave 3 then the price should increase steadily from here to exceed the recent highs of 1285 and beyond.

 

I think we are in buy the dips territory now.

 



[Guest Condor]

Hi M, even looking back to DEC 2013 around your yellow line has been a support/resistance area.  I'm working on the basis (for now) that the break of that level isn't a false breakout and the price won't be falling into that range supported by 1230.  The Jun 1250 Calls that I bought little over a week ago are showing profit & my view is these will only climb in value from here.  Also I found a Gold ETF linked to physical gold (PHGP) on the LSE which I also put into my Pension fund so thats another way I've found of hopefully riding the Wave up on Gold (funded by a switch out of UK Equities). 

Feel the same on trying to buy on dips - hopefully at 1243-4 but may have to be higher if weakness in the price doesn't materialise.

Also The Daily MACD looks like a buy signal with Blue Moving over Red.

 

 

[Mercury]

All good and nice that MACD Daily is supporting.  On the Hourly however it is showing a sell off and that is in line with other oscillators (RSI, Stochastic Momentum) so I am expecting a pullback here but only perhaps as far as my larger Triangle line, maybe to 1240ish area.  Any turn here is a "buy the dips" opportunity in my view.  Ideally this would also coincide with turns down on Oil and stock indices...  If that happened then all the main markets would be syncing up nicely.  US open might tell an interesting tale today...

[Guest Condor]

Yes I see what you mean  on the 1 hr  indicators are indeed looking like a pull back about to happen.

[Guest Condor]

Were the indicators giving false signal?  the price has gone through 1255 and I'm wondering if 27th March was a pivot point and my trendline placed here (not wonderfully accurately , will refine) gives a new upper trendline ?



[Mercury]

If we have had a major turn and are into a final wave 5 up then we have only just turned into the wave 3 of this move and therefore it is too early to draw a tram, trend not yet established fully.  However if you forced me to draw one I'd do it as per the chart below (parallel line at the brown W1 of the upward W3 move).  More important is the down-sloping trams.  the one above is where I might expect a pause or a reversal if one is to happen (1266ish).  Even then I only expect a small retrace or pause here and if/when this tram is broken then nothing stopping the market gaining the 1400 level.