Can Gold Be Trusted?
As you know I have been tracking gold again recently for a variety of reasons. Its close correlation with movements in the USD/JPY are worth noting but it’s also exhibiting price behavior indicative of a possible low. So the obvious questions that needs to be addressed is whether or not a medium term low in gold may have been reached and if it makes sense to start accumulating long positions.
And right off the gate I’m seeing a few problems. For one we do have a touch of the lower 100-day SMA and the formation of a spike low, but that Bollinger has absolutely zero value as it hasn’t been touched in a very long time. And even if the BB does represent genuine support – well, it’s starting to dip lower now and that greatly diminishes its technical value as it may just start leading price lower.
Further, gold is currently attempting to revert above a NLSL it breached a few sessions ago but thus far has failed to overcome it. And finally the weekly panel shows slice through what was supposed to be a support diagonal. Sure, this could just be a fake out move lower and I cannot rule that out. But with the 100-week SMA above us it’s equally possible that the current drive higher may just turn into a last kiss goodbye before she falls into the abyss.
And then there is this of course: the USD/JPY correlation which I’m plotting here relative to gold. As you can see the USD/JPY has been dropping (inverted blue line) but gold has suspiciously lagged behind. But let’s be objective – I may be completely off here and it’s possible that gold will catch up with the USD/JPY soon. So what we should be watching is what the USD/JPY does next. If it continues to drop (and thus rise on this inverted chart) then it will probably provide sufficient lift to keep the gold bears at bay. If it should start rising (and thus fall on this chart) then I would not want to be holding long positions in either gold or silver.
The USD/CAD has made it on my watch list today as it looks like sellers are reaching exhaustion and it may form at least an intermediate low. What irks me however is the weekly panel. The lower BB is starting to drop (and again has not been touched in ages) and there’s basically not technical support we could hang our hats on. So let’s keep watching this one for the next few days and then decide if it’s worth a small exploratory long position.
The AUD/USD has exploded and fortunately not in our faces. Who would have guessed that this one would turn into a 4R winner in less than a week? This will go quite some ways in hedging the small fortune I’m losing living in Europe while the Dollar is being manhandled by Mrs. Yellen. Anyway, my target range has been reached and I’m all out – if you’re still holding this one then you may want to do the same.
Copper on the move – we got lucky there and our trailing stop got almost tickled yesterday. I’m now moving it higher by a few ticks just below that recent spike low. I think this one has runner written all over it! Good times
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