Mercury

Gold looks to be holding at the Flag support zone but Silver has endured a much sharper decline and is now bouncing off the lower line of a Daily Triangle (blue). Both could hold here and rally or... With Stocks retracing back down into Triangles and USD thinking about whether it will rally or drop through it seems like everything is at a critical tipping point. 2 interesting cross market scenarios seem likely candidates: Stocks rally, USD falls, Gold/Silver rally (or maybe go into consolidation Stocks and USD drops through support into another Bearish phase and Gold/Silver rallies hard Interesting times... My bias is for #1 BTW...

Interesting @Caseynotes As a contrarian I like to trade with the commercials rather than the financials, especially the hedge funds. This would suggest to me that we should see a rally in Oil soon.

But it doesn't mean diddly @cryptotrader, if we are not sure we should not trade, in fact this would be pure gambling. Even when we are more sure we get it wrong most of the time (well I do...). So if the people on this forum, with all their different methods all say they are not sure then there is not trading opportunity, surely?

@PandaFace, I'm happy to be tagged as you suggest and will try to offer whatever opinion etc. I have, according to my own method (as always please treat any such carefully and always make your own decisions based on your own method - i.e. we should not blame others, or the market, for our own bad decisions...). On this particular market, I have traded it in the past but am not active in it now due to inherent uncertainty, high margin requirement and poor risk/return equation vs other markets. Also I tend to look at Brent rather than WTI as a better international view point rather than the US focused WTI but largely they align I think. I have to go all the way out to the Monthly/Weekly charts to show the inherent uncertainty point. The macro set up is as follows in my view: The market topped in July 2008 and then got hit by the Credit Crunch related massive drop to Feb 2009, just as "Peak Oil" mania stories were rife in the mass media (note this is different to other commodities in pattern and relation to the Credit Crunch so Oil is not behaving like other commodities, with respect to stocks and bonds. In fact I don't think you can make broad statements about commodities in general and have to look at each market separately). Then this market made another strong rally (topped out in 2011/2012 - that one was more aligned to other commodities!) and then descended is a strong bear market. In Elliot Wave terms this looks like a large A-B-C retrace move but the question is whether the C has been posted yet or not? There isn't enough historic data in IG for me to analyse on these charts but from other sources (TradingEconomics.com in this case) I can draw a rough average historic low or support line around about 1,000 level. Using this as the base I can see that the 2016 low hit about the Fib 88% level before the current rally. This means that it could easily have been a Wave C conclusion of the retrace and the move up now is a large Wave 1 of a long term rally in 1-5 form - i.e. we may see new all time highs for Oil in the future). Such a set up would fit with the Fundamentals scenario of peak oil production and therefore dwindling supply of a still critical energy source. Not to mention conflict over oil in the future - scary thoughts! The rally from 2016 could be in a self contained 1-5 to recent highs, thus we would expect a significant retrace (maybe 50% or more) before further rally, IF the market has topped out already. The alternative scenario is based on the fundamentals view point that Oil will be swiftly replaced by alternative energy, indeed already is being despite The Donald's best efforts, and is in a death spiral, of which the current rally is the last gasp. I would not expect Oil to disappear completely as there are plenty of industrial used over and above energy production, so it doesn't go to zero (as Bitcoin et al probably will...). Therefore under this scenario the massive A-B-C retrace has not yet completed and will not do so until it reaches the historic average support around 1,000 (hard to be at all accurate on this level!). The current rally is a Flag (Wave 3-4 retrace an will breakdown through the lower line to a fast bearish drop to that support level, maybe aligned to a stocks crash like in 2009. Looking at the Daily and 4 Hourly chart then, I can see a possible market top just short of the Monthly Fib 50% (recent highs) OR another leg up to hit that resistance more firmly, maybe coincidental with Stocks tops, if they haven't already happened... In any event I would expect this bearish move to continue down to the 7,000 area support level and coincident with the apex of the recent Triangle (the 3-4 retrace of the previous rally - a common turning point). Then we should see a 1-2 retrace back up to resistance levels before a stronger drop (or fresh highs and then a drop). This works for either of the big macro set ups. The only thing that might happen yet is a final leg up as mentioned and the best trigger of this is a break of the tram-line after a reasonable Support level turn. Trading strategy: I find it very hard to assess probabilities on this market, which is dominated by a few very large players. Too your point Pandaface, it is impossible to know what is really priced in, which is why I use technical analysis. But this market often defies analysis methods and the set ups are such that I can't see which way this is going to play out yet. I do not like trading this market Long just now as I see very little upside and prefer to wait for good quality Shorts to present themselves. There are just too many unknowns and the short term risk vs benefit isn't there for me, there are much better odds elsewhere, as we are perhaps seeing as I write this - USD bearishness, Stocks rally... Once we seen a decent Short set up then even in the "Peak Oil" scenario there should be 4/5000 points for a retrace move. After than we can reassess which macro scenario might play out. Look forward to feedback on this and more tagging for discussions, this is the whole point of the Forum after all.

A brief update on what HGC is doing. Basically it is in consolidation (Flag formation) since the recent relief rally phase. The breakout of this flag will determine the next phase but I believe it will be a second stage rally to complete an overall retrace move that will then turn a drop heavily. I am currently anticipating this to align to stock indices movements and any top out on HGC to be indicative of Stocks top out (or retrace turn, depending on the eventual resolution to stocks). If the Flag is valid it suggest a top out of the retrace rally in the 31,000-31,500 area (around about the Fib 76/78% area. This could suggest a strong Stocks rally phase coming up.

So I feel like maybe stocks are turning for another rally (in what form etc not sure yet) and EUR/AUD/GBP look set for a rally (USD DX to fall) but what about precious metals? Since late Jan/Early Feb Gold has been running in opposition to Stocks (classic inverse), while stocks have been rallying Gold has dropped in a retrace action. Of note, while stocks dropped Gold did not rally but rather went into consolidation. So Gold is out of favour. What could change that? Well obviously a major stocks (and bonds) crash could do the trick. Also a period of USD weakness could help the case for a Gold rally. Hmm, one out of two is not that encouraging. If the assertions, above, are proved true then Gold will, in all likelihood consolidate again, maybe with a retest of recent breakout points (circa 1,200 area) before any significant rally gets underway. I note that Gold experience a bearish pin bar on Friday that suggest the next move will be downward, however the overall candle was in the green so not a completely Bearish set up. Additionally Silver is currently tracing a small consolidation patter with an inside bar set up, which is indicative or a turning point, however these things can break either way in not in an obvious trend already. Net, alas we could see both these markets retrace further before a strong rally OR they could breakout into that rally from here. If the former happens there will be good retrace turns opportunities further down, if the latter happens then we will be looking at trading the break through of overhead resistance. Anything in between is a high risk trade. (road map lines on my charts are indicative only) Trading Strategy: I will hold my existing positions stop protected below the key support zones on Gold and Silver, despite my temptation to swing profits now because there is always a chance of a swift breakout of over head resistance. I will look for consolidation (or especially any retest of key support zones) breakout points to emerge and seek to add to my positions when they present themselves as low risk trades I will seek to trade fast strong breakouts of overhead resistance (this time it may not look back - i.e. no significant retest)

So turned out another leg down was required to reach a suitable Wave 1 turn, which rallied hard away. Expect a 1-2 retrace before the rally really gets going. The problem for me is this pair is on a different part to EUR and GBP, which is annoying as it gives rise to a nagging doubt over the USD prognosis in total. Enough to be wary but not to change my view at this stage. The prognosis for this pair is for an A-B-C move, likely to be very volatile and fast moving with equally swift reversals. The total points on offer is lower than EUR and GBP and therefore I am staying out of this pair in favour of the other two. Better set ups and stronger rally with more shallow reversals is my expectation.

Very similar set up to EURUSD (check post on that thread for more detail, which I wont repeat here). The Daily chart shows me a retest of the Triangle breakout zone and rally away at a likely Wave B turn. The rally on GBP is weaker than EUR at present so the chances of another leg down are higher here but the same 1-2 retrace is also a high probability candidate. On the 1 hour chart you can see the turn at Fib76/78% with an overshoot (common on the spiky GBPUSD). If we see a small 1-2 retrace and rally away that will be a bullish signal for me, as will a break of the Tram-line. Similar to EUR there could be circa 1000 points on offer here but in retrace rally (Wave C) prior to a long bearish phase to come. Looking fro a Flag about 13,300 to set up the 13,800 rally end zone, which would align to the Weekly chart Triangle breakout, which would necessitate a spike through overshoot of the Fib 62% (again quite normal for this pair). However you cannot ignore the Fib 50%, time and price action will tell the tale.

Apparently KKR’s Hugh say he expects markets to forge ahead for another 12-18 months. He didn’t say what happens then... LOL!

Sounds right to me @TrendFollower, I don’t use MA much myself. For me, with the set up I have evolving, a break through resistance ought to be strong and therefore retrace no more than to retest that resistance level. I am looking more at the 1245 area. If you wanted to give it more room against a hard retest then I would be looking at the 1225 level of the series of lows and turns. As a general rule I prefer to cut losses early and seek a re-entry rather than ride out larger losses. I sleep better at night that way... ?

It's a very important point @TrendFollower but very hard to answer because stop setting is all about attitude to the risk/reward ratio. If the rewards are massive and you can afford the loss in your account then a larger risk might be acceptable BUT only if you have a high probability of success. How you assess both the probability of success and the stop position is determined by your analysis and trading methodology and so mine is very likely not to be the same as yours. It would be easier for me to comment (using my methodology) if I knew what you were thinking of doing, both in terms of a trade execution point and stop levels off that. As for me, I took my long term trades before the market broke out of my Daily tram-line (blue line in the below chart), based on pre-identified turning points. Such trades are somewhat speculative and can easily breakdown so I always keep my stops close, just under the turning zone and, as you say, exposing me to no more that a set %. Once the market moved in my favour and I was confident that we would not see a retest of my turning zones (in this case when the blue line triangle was swiftly broken through on 11 Oct) I moved all my stops to break even. With zero risk (excepting some crazy flash crash) and significant potential upside. I am sitting on that and waiting for the next stage to begin a pyramiding strategy IF Gold does indeed rally long term. I have done something similar on Silver. So let's look at the charts now, I am confident that Gold will rally hard but not confident on when yet. The first step is done, that break of the Daily Triangle, but we could easily see a retest of the breakout area (1,200 zone) as you have been saying TrendFollower. This scenario I have road mapped with red arrows (not timeline accurate of course) and in truth we could see a turn at any support zone along that red arrow down. The alternative is that the short term Flag formation holds and we see a strong rally away near term (blue arrows). The upper Flag line has had 2 tests already and both were rejected (albeit the first was a so-called "hard" retest, where price actually penetrates but recovers back above the line) but we look to be setting up for a third and who knows whether this will hold again of break through??? Gold has not been rallying hard as stocks dropped, USD has been rallying, which is perhaps one reason Gold is sluggish at present, but what happens next? What if stocks rally and USD falls? What if the reverse happens? My approach will be to wait and see which way the short term support goes and follow 1 of my 2 road mapped scenarios accordingly. I will only add to my positions when I see price action that fits my road maps and typically keep close stops at entry to guard against invalidity of set up. Any trade I might take around the short term flag will have very close stops because the likelihood of this being invalid is higher. I would be more confident to let a retest of the 1200 level have a wider stop. A trade on the breakout of over head resistance (if it is a fast move) would have an average stop distance but if volatile (i.e. during something like US NFP) it might need a wider stop initially. I would not move to break even on this breakout until I was sure any retests of the support/resistance area were done. In general terms, many people talk about placing stops below the previous low (or above the previous high) from the point you enter a trade. Others talk about a set percentage rule. I have always preferred to go closer as I feel if the market does not turn at my identified turning point my set up is invalid and I must look at the alternative scenarios (or alternative turning points in the same scenario). This sometime causes me t get stopped out a few times as I attempt to enter but my strategy is to lose small and win big (fewer bigger better). So I don't mind that so long as it does not become a death by 1000 cuts situation. Again it is very hard to be precise about this because every set up is different. What are your thoughts?

AUDUSD may have already turned at Wave B and completed a couple of hard retraces. I took a spec Long at point 2(brown) and am awaiting events. If the other USD pairs make turns before a third test then this market could take off into a descent rally phase. AUD seems to be a little ahead of the others.

So my first target proved to only be a consolidation point, no surprise as the EW count was a bit off but the second will be more interesting perhaps, lets see. EUR is doing a deeper retrace and may hit the Fib 88.8%, which is acceptable for a B wave but obviously it is a short drop to support break and the beginning of a full on Bear move so need to watch carefully for this scenario. The safer trading point is a breakout of the blue tram-lines, after an established turn. If taking a Long on the 76/78% level need to protect well with stops but keep in mind that GBP is a spiky market, especially these days.

Gold rally phase looks strong, although it has been in consolidation during the recent stocks bear moves, not dissimilar to USD. Makes me think Gold is not yet acting as a safe haven store of value yet. I suspect the next move will come thanks to USD price action rather than stocks but regardless of why I still see a strong Bullish set up, albeit short term there may be more consolidation. Having had a breakout and retest of a potential small scale flag formation (these are relatively weak signals being on short term time horizons) I am looking for a stronger break through of overhead resistance levels to trigger any additions to my Long positions. Caution is required during any consolidation period as whiplash price action can cause death by 1000 cuts. However there is good potential here if we can tap it. The Daily chart medium term prognosis is speculative at this point and therefore only a road map guide but a strong breakout would get this market on the road and then constant revaluation will help manage any trades in play. Silver set up seems even more Bullish to me.

alas not. Japan took another tumble. Looks like everyone is skittish about a big fall, and no surprise there really. Will have to let this play out a bit to see how things shape up I think. Without detailed analysis there will be a strong rally but whether that will be a retrace before the big plunge or a final bull splurge is impossible to say at this time. No need to jump onto the Bear bandwagon at this point as a large part of the current Bear move is done in my view, just waiting to see where it will turn to rally again for clues as to whether or not we have seen the end of the Bull or not. Either way the next big picture rally will run high and will retrace more than 50% of the current move down.

big bounce off the Fib 78%. Same for Dow, SP500, FTSE and Nikkei. No idea what the Dax traders were thinking... This is following my A-B-C retrace scenario nicely. Let's see if this is sustained...

Still stuck in consolidation, ho hum! With a fairly swift move down on US opening I looked for alternative scenarios. It looks to me like we could see a retest of the 7000 area on Nasdaq (and whatever is similar on others). This would from an A-B-C deep retrace before a possible rally away off the support levels. Could take the rest of the day to resolve and leave us with another day of wondering "is this it" tomorrow.

Similar to EUR this pair is now into one of my 2 turning zones. A turn here is now more likely IF EUR also turns at the Fib 78% in that case. A turn on USD generally is bullish for Gold/Silver, as is a stocks rally. PMD and oversold indicators also support a rally at some point relatively soon. If you don't want to take a speculative trade then a break of the upper (pink) tram-line is also a decent trading point, once we see an actual turn.

Nasdaq appears to be leading again as the Tech Boom 2 revives, but it is a last gasp rally? There are 2 rally scenarios: A final leg up to fresh all time highs and market top before a crash slowly begins The top is already in and this will be a 1-2 retrace to a suitable turning point before a resumption in the drop But for now I am just concerned with ensuring this is a rally phase at all and the current drop is ended. Nasdaq has pushed to a higher high in out of ours trading supported by the Nikkei. It looks like a minim Flag has formed and been broken. If correct we should not see another significant retrace until the 7350 area. Let's see...

SP500 and Dow just short of Fib 62%. In the former case this is on a parallel tram-line too. This is an important zone of support I feel. Could get another test or two on the hourly chart but a firm rally away from here would be Bullish. Also have PMD on the 4 hour chart.

That's why we buy (and sell) on leverage SB platform...

Never did it but did look into it once. The dealer I know about is called Sharps Pixley, UK based respected company. They actually have a shop on St James St in London I think where you can buy small level items but really they deal in physical bullion as dealer and storage service. I think a chunk of their storage is in Switzerland, if memory serves. Check out their website. https://www.sharpspixley.com/

FTSE100 is too, I can see another small leg down though before any rally, especially on the NASDAQ, which I am guessing will open soft and hot the 7000 area before any rally, or else plough on through recent lows of course... Given the depth of the current retrace (if retrace it is...) there is not much to go before we could see a break through support levels, which makes the case for having already seen the end of the Central Bank Bull stronger. A turn and rally has to happen soon, although this kind of consolidation can go on for ages, I don't think so however as I think the market will resolve this one sooner rather than later.

Agreed @cryptotrader although I suspect Gold/Silver will rally now whatever happens on the stock indices. There is never a 100% relationship all of the time and Gold can go up at the same time that stocks go up. I would like to see USD drop in retrace for a while though to seal my confidence in Gold/Silver to rally for a while.

Personally I think the Dax is sending the wrong signals, it is prone to volatility. The US large Caps, and maybe particularly the Nasdaq, are the markets to watch to decide which way this consolidation phase will break.