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Gold for April & Beyond..

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Hi all is anyone charting Gold just now..Josh on the charting IGTV prog. made me think re Gold upside on Markets & Oil falling.

Traditional safe haven in troubled times and all that.  Never traded Gold but thinking about the possibilities..input appreciated.

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Condor,

 

Check out the "Does anyone trade gold?" thread.

 

My current view is that the turn I was forcasting for the Daily 38% Fib may already have hit.  I think we may get a run down now for a while and still not yet sure if we have had the W4 completion but will post an update on that thread in a bit.

 

M

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see my video on gold.dont go long mate and dont listen to people on tv.

 

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I don't think the picture on Gold is at all clear, except for the short term where I do see further drops (or at least a continuation of the current whipsawing around in a complex wave form).  For that reason I am out of Gold and will remain so until things clarify.

 

Long term can Gold go down to new lows?  Of course it can.  If you look at the analysis of people to try to "value" gold you will see that it is significantly over values.  I don't place to much store in this kind of value analysis but it does match my underlying concern that Gold is not exactly cheap.

 

Having said that, there is also a strong argument for a massive Gold rally if everything else starts to fall heavily and some serious people are tipping exactly this scenario for gold.

 

As mentioned in the other thread, I see a retrace back down to 1200ish area and then we will see.  Look also at Silver where I think there is a cleaner set up for a stronger retrace (on this one I went Short). 

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The last time I posted on Gold (see does anyone trade gold thread) I suggested that this market may be in a EW complex wave 4 movement and predicted another move up and down within the Triangle formation (pink lines on the chart below) and so it has transpired (move down in prog).  This confirms for me the complex wave pattern and they are a ***** to trade.  Conventional wisdom is not to trade within the Triangle range but wait for a breakout.  Alas this could happen either down or up...  For now I'm staying out and watching developments.  A break down takes us to the 1190-1200 resistance point and a break up into another rally phase.

 

I'm also watching Silver for any advance signs.  There was a big buy into Silver yesterday but that looks to have petered out now and a retrace back down from overbought levels is indicated.

 

As an added piece of info, Hedge funds are heavily Long Gold and Silver according to the weekly COT data.  As trend followers they often get the turns badly wrong, is this to be one of those moments?  A break below the Triangle line could trigger a bout of Long covering as stops are taken out that could easily take us down to the next line of resistance.  This is my primary set up at present. alternatively a bounce off the lower triangle, if Silver is in lockstep, could be a decent Long trade but I will await further info before making that call.

 



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Just for fun, here is my Daily chart, which shows the potential H&S formation recently referred to elsewhere.  The problem for Elliot Wave users is the rally up from the (alleged) market bottom is in a clear 1-5 (or at least 1-3 of 5, depending on how you view it.  Given he strength of the blue wave 3 it is very hard to view this as an A-B-C, which is what you would want to see if expecting a major move back down beyond 1050 "bottom".  It is possible to have a 1-5 followed by another 1-5 in the opposite direction but that usually happens at a major market top or bottom, which is what we have had back at 1050 BTW.  Unless or until something else shows itself my forecast remains either a bounce within the complex Triangle (off the bottom line at pink 5) followed by a break of the upper line of the Triangle and on to new highs OR a drop to 1190ish to complete a standard W3-4 and then a 1-5 leg back up to fresh highs.

 

Having said all that I can't and am not totally dismissing Fibking's view (and thanks for offering it, great to have that watch out) and so will be watching for that too.

 

Spot Gold Daily 210416.png

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If Gold is indeed in a complex wave 4 then I would expect a small rally followed by a stronger drop to that 1190 support area before the next big rally out of the complex wave.  We may be already into the small rally...  I can't see a trade on Gold until this uncertainty sorts itself out.

 



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If Gold holds to the complex wave pattern then it could be undergoing a Wave B turn at Daily resistance.  This would set up a run down to 1190-1200 area in Wave C before a rally back up.  With protective stops just above the daily resistance line this is a decent bet.

 

 

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So not a wave B then, damned tricky these complex waves, caution is the order of the day.  It seems the C/x wasn't finished but now it may be finishing and will most likely do it with a double top vs the 11 Mar high.  If it punches through this resistance line then the Wave 4 was 27 Mar and we are in the wave 5 up.  However if it does make another small wave 5 up to complete a Wave C/x and double top then we can expect a strong move down to complete the Wave 4 at or near 1190.

 

For me a Short after a turn near the resistance line from the 11 Mar high with a tight stop is worth a punt given the 90 points on offer, the risk reward is very good.  However complex waves are difficult to predict so this one has to rank as a 50/50 and for those of a more caution bent waiting for the conclusion might be safer.

 



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Hi   ,  I managed to get Long and ride up and exit in the 1290's.  I'm now out and believe that was/is W5.  It might go a little higher but I think it's run out of steam so I was happy to exit with profit.  The momentum divergence looks clear so as per your comment above this now looks to be a good shorting opportunity with good risk/reward -  correction (A-B-C?) down maybe to that $1200 area as you indicated looks plausible with another Bull run after?,  I'll be watching for an entry after the long weekend to get on that correction down.

ps. Actually I mentioned sometime ago that I'd bought Gold ETF's in my ISA/SIPP and in sync with my IG a/c took profit on that and went flat.  I also hit on a proxy for Gold in Randgold Resources Ltd (RRS)  (along your idea of Oil / RDS ) and went long on RRS and closed that out too. All in all that was a good W5. 

C

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Well done on Gold   My first scenario with the Triangle formation suggested that Long but I then shifted to a complex wave view, which I tend to avoid trading owing to the whiplash risk.  As it turned out my first view was more correct, it was a simple A-B-C that completed 28 March, live and learn.  I was also not really trading Gold and Silver just now because I was focused on stalking the bigger turns on Stock Indices and FX, which I happy to say is working out very well so just goes to show you have to stay focused even if you are trading multiple markets.  

 

Looking at Gold again now, and I think Silver is showing a similar picture, I see a completed wave 4 and wave 3 of wave 5 up is also done so now we are in a retrace before a final push up, perhaps to that 1400 area I had previously targeted?  After that I'm not sure but obviously that would be the end of a motive wave up and therefore a significant retrace could be expected before any next stage rally.  There will be some points on offer going Long once this current retrace is concluded (100-150 on Gold maybe?) before a more significant amount on the bigger retrace.

 

I think there are more interesting markets elsewhere just now so am content to sit this out until the bigger retrace perhaps unless I spot a no brainer entry for the final 5 up.

 



 

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thanks  it's one of the few Ive got correct :).  I have tried shorting earlier already on Gold but got stopped out when it spiked and took me out at BE.

Where I have succesfully entered Short is on Silver at 1757 now at 1732 so I've got stop at BE and fingers crossed the new down trend is in with lower lows, lower highs.  I'd like to get back in to Gold short but don't feel happy to right now.  

I'm thinking GOLD is an ABC down and to get on the C but trying to read the tea leaves on that is not clear.  C

ps.  I'm still struggling on Indices to get entry correct - doing better on GBPUSD / NZDUSD / Silver

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Hi 

 

A few thoughts for you regarding your last post, just random really so take or leave as you like:

  • I often exit too early thinking the market is about to turn and in the past have reversed and got caught out.  Now I look at the big picture and stay with the main trend, avoiding all but the biggest retraces.  Gold is in a small retrace and these are hard to time with poor risk reward ratios, look for the bigger turns.
  • When you exit a trade and are thinking of reversing wait for a bit and see how the market moves, updating your analysis as you go.  You have secured some profit so don't rush to give it back.  You will have exited because you think the market is going to reverse but how confident are you.  The dual bet approach allows for securing profit but staying in when unsure.  Alternatively simply move protective stops to a point you are satisfied with but allows a chance for more gains.
  • For the markets that you want to trade look back over the past and see if you can identify likely trade set up that you would have liked to have gone for.  Given a normal entry point (usually not the top as this s very hard to hit) what kind of stop distance would you have needed to not get stopped out?  Then look at your account and see if you can manage with such a stop level.  Don't trade markets where the stop level is too rich for your account.
  • I believe you have looked at John Burford's websites?  He used a 3% rule for maximum risk on an account at any one time (note not any one trade...).  This is reasonable but if applied to a market where you need a wider stop it is useless!
  • GBPUSD is ok but spiky, EURUSD is a better market and there was a great trade on it yesterday.  Use EW to try and spot retraces of the motive wave and enter then the turn back into the long term trend is confirmed.  I particularly like the small 1-2 after a major retrace turn (i.e. 1-2 of wave 3).  This is where we were on stock indices (e.g. Dow) with an almost exact hit on the 62% fib on 2 May and again the next day with a 50% hit.  It is easier to get in when the trend is running hard as it is just now.
  • I tend to focus on trading on bigger markets with more players and more liquidity.  This means a little less spikiness and unusual moves.  NZDUSD is a small market and one I wouldn't trade, unless you have some particular affinity for it I guess.  I can say the same for Silver, tricky is you don't have a large account to absorb wide stops.
  • Alas the old saying, " you have to have money to make money", is all too true with trading.  The larger your account the wider the stops you can take and the larger the positions you can take.  Until then you have to chose wisely where you play and how and build up slowly.  Patience is the key.

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Great points  ..yes ive been folllowing Burford and found the hard way 3% isnt enough but I'm heading in the right direction now i believe.  From Friday to today things are going much better and i'm going to fund up my account soon.  Hence i am exercising patience as best i can and can see the value in that. 

Fortunately my entry on GBPUSD is far away from current market price ( by 150pts) thats massive for me & I can relax on that one.  It's only a single entry so I'll have to judge my exit.  If dollar continues to strengthen then maybe I can make 2nd entry short but i guess we're some distance from knowing that or indeed if it reverses exit for profit.   I'd also like to get short EURUSD so will study again to find entry.

NZDUSD isn't mainstream but when i looked at price chart seemed clear and i found entry that worked so i'm happy on that and kind of gives me a split bet across 2 mkts against USD.

Silver has worked out better for me since I closed my Longs in Gold and i'm in with a reasonable headroom and a 2nd entry which is also now in profit with stop at BE.     

Basically I havent been this well setup as this since i started 24/3:  I've got 3 free rides going so hoping for some joy finally.  Your posts have really helped I must say so thanks very much. C

 

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looked like Gold and Silver were turning around so I exited for profit - glad i did as price action has come right back.

 

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Small retrace always tricky and not particularly profitable.  This move has to close above 1290 to negate and final move down to complete the A-B-C.  If we get another move down then weekly chart support just below the 38% Fib at 1272 looks like a decent bet for a Long.  If we get a close above 1290 then Long on the next pull back.

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Has Gold made its retrace (to Fib 38%) and turned back bullish, just as stocks come under renewed selling pressure?

 



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I guess not.  Shows the beauty of using stop in orders at key levels though, I had set my stop in at 1290 and it didn't get hit before the next leg down.  It's still there though...  Now we have a second bounce of the weekly support line.  I'm not sure this is finished just yet though.

 



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So Gold is tracking the stock market and/or Oil apparently, rather than going in opposition?  Maybe stocks rebound soon but Gold looks like it could be coming to a retrace end.  My 4 hourly chart shows the 1-3 wave up of 5 to complete the whole motive wave up (can't be an A-B-C because it comes at the end of a motive wave heading in the same direction rather that opposite).  Nice A-B-C formation in prog heading down with 50% Fib sitting right in the middle of a congestion zone.  On the Hourly I have the same with an additional 62% Fib off the W2 turn coinciding with the larger 50% and Pos Mom Div building but not yet there.

 

I anticipate a turn back up into wave 5 of 5 in the congestion zone around about the Fib lines.  Worth a Long bet when it hits or just after any turn.

 

 

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if you noticed on the weekly chart it has smacked the weekly tramline where wave 4 finished, possible w5 now commencing.

Momentum diverging clearly on daily chart.

gold 4h.png

gold 4h.png

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Hi  I don't think I can agree with your weekly upper trend line, not enough touches to make it valid for me.  I have mine drawn slightly differently using 2 areas of touch points above, nothing current yet so still not valid but as a guideline, ok.  Bear in mind that I don't place much faith in either mine or your at present because there isn't a decent parallel line to be found below.  I favour the set up that shows an ending Triangle formation at the 50% Fib off the long term lows form 2000 to the 2011 all time highs.

 

That said I can't rule out a 3-4 wave, which is your main argument here I think?  For me the current rally could a Wave 4 but as it is currently tracing a 1-5 pattern rather than an A-B-C I think either a Wave 1 or Wave A is a better fit (so far!).  In any event it is all about where this move will top out.  My Daily chart is forecasting the final wave 5 of this move, which I believe is where we are, to head up towards the 1400 area where it comes into contact with resistance zones, the Fib 38% off the 2011 high to the Dec 2015 low and that pesky tramline for what it may be worth.  After that I have no idea, depends what is happening else where.

 

I came across the attached article this morning and thought it may add something to this discussion, the idea of short covering is attractive as it suggests a strong rally once we hit the 1300 resistance level (see my Daily chart) and that is consistent with a final leg up to the possible end point I have highlighted.

 

http://www.advisorperspectives.com/commentaries/20160510-money-metals-exchange-here-s-what-makes-precious-metals-short-sellers-nervous

 



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I'm still expecting a retrace down to your middle purple tramline line area (weekly) which is Bold Green Line (daily) .  I'm determined not to get Long again until then.  Maybe it's an ABC retrace and looking at price action since 1303 top a week or so ago it seems to me to be lower lows , lower highs pattern (early days i know) but it fits with my bigger picture.  That said I'm not confident enough to go short which would be the right thing to do IF my scenario holds water.  C

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Hi , you would need a break in my Green up-sloping tramline (confirmed with a close below) to confirm your scenario.  Just now there is Pos Mom Div on the hourly so while a retrace back towards the near term resistance (in the zone of the recent bottom) is possible I think we can expect a rally on the hourly time frame at least.

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yes good point - i'll be watching that tramline - i can see that it is strong with a few touchpoints making it a good line. C

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Gold looks like it might be in take off mode!  Has been a bit choppy of late but has bounced off the lower tramline on the daily after good Pos Mom Div on the hourly and if it can break through the congestion zone circa 1300 the way will be clear for the 1400 area.  This as stocks go back into retreat...

 



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FWIW, non commercials are net Long Gold in the amount of 299,000.  Last time they moved up into these kind of levels (280k) was Autumn 2009 when price was about 900-1000 and then the market went on a run to 1950 peak in 2011.

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Great catch Mercury.

I was bullish already.

This really has me watching.

Chart set up is bullish. It will get through 1300 eventually just might need a few more goes at it.

 

Cheers,

 

JB.

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Agreed, it could be quite choppy for a while until the 1300 level is breached and a firm move in play, especially with a resurgence in stocks bullishness, which I can only assume is down to Fed dovish expectations.  I wonder what it will take to meet these expectations?  If they are not met then stocks will fall again and with Oil and Copper looking like turning/continuing down (not yet confirmed) then that would give a huge boost to Gold.

 

Incidentally I was at a Bulls v Bears debate on Gold yesterday hosted by the AMA (miners association) and sponsored by Money Week and Sharps Pixley where the mood was overall short term bullish.  A few facts jumped out at me, which I thought I'd share FWIW:

 

  1. The Bears didn't seem to be bearish so much as not long term bullish and preferring other precious metals such as Platinum and Palladium and the arguments supporting this were about supply and demand and the lack of intrinsic value in Gold (i.e. only seen as an investment in times when people use it as a store of value)
  2. The bulls made a strong case for the store of value argument being relevant now (we all know it so I won't summarise it here) but the chief driver was that because interest rates are low and so are yields elsewhere (i.e. bonds) holding Gold, which has zero interest and costs to store is attractive.  Oh and apparently it is cheaper to store gold than cash on a value basis...  Gold does well in periods of hyper inflation as a hedge against this but we don't have that just now.  So the bulls are expecting interest rates to remain low or negative and inflation to eventually arise...
  3. There was a discussion about gold as a commodity vs as a form of currency.  The net of this was that most said it was a commodity, albeit one with little practical use.  The idea of gold being used as a medium of exchange was not readily accepted as plausible BUT there is something arising just now called "Bitgold"  This is bitcoin like but backed by physical gold, a sort of electronic currency that has reverted to the gold standard so who knows...
  4. One other thing that was interesting was the notion that if central banks, especially the Fed raised interest rates then the case for gold would reverse BUT no one believes they will because it would cause the collapse of the system.  However no one could answer the question of how we get out of the mess we are in with the CBs continuing with a policy that everyone agreed was not working

 

My take out was confirmation of my long term forecast that the only way out is for markets to do what they have always done and reset the cycle, taking matters out of the hands of the CB politicos with a massive bust cycle.  In such a scenario gold will be a source of wealth protection but if it happens in a deflationary way then that would be against gold in normal circumstances, but depression is not normal I guess...

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Oh and one other thing mentioned was don't trade any precious metal except for gold because the markets are too small and therefore both lacking liquidity and prone to volatility. 

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