GOLD (GC1 Futures) Mid Term Update
Updated
As a refresher, in the previous weeks, I posted a mid term chart for GOLD - based on the Futures charts - which suggested a move down to a previous support area (around 1745 LONGTERM). That chart can be found here: 
GOLD has now moved around 100 points from the suggested entry point. The sell off in recent days has been very intense; this is due to the relentless strength of the US dollar, supported by reasonably bullish data releases which support the FED's "higher for longer interest rates" narrative.
There may have been a turning point yesterday.
NFP released, showing a HUGE gain of over 300K jobs, massively exceeding the expected 170K job forecast, however, the picture is not so rosy. On closer inspection, full time jobs were lost, part time jobs were gained and more people seem to be taking on 2nd and 3rd jobs to meet ends meet. A big NFP number is only as strong as the quality of the data.
This may explain why earnings (month on month) were down, but nonetheless, GOLD has surged on this data release as it appears market participants are starting to see the cracks in he US economy.
I am expecting a retracement to either:
1) The RED BOX ZONE: This coincides with the 0.5 FIB of the recent daily wave down.
OR
2) The EXTENDED GOLDEN ZONE: This coincides the zone between the 0.618 and 0.71 FIB levels. This would also serve as a retest of the daily "M" pattern that was formed. While the pattern became over extended in recent days, it is still possible for the neckline to be revisited.
In terms of order execution, you can:
1) Wait for a retest of the GOLDEN ZONE of the 06/10 Daily candle.
2) Place a BREAKOUT LONG above the current PURPLE ZONE, with a SL below either the midpoint of the zone OR below the zone (providing you adjust your lot size accordingly)
3) Enter call positions around this area as it will be relatively low risk.
Please remember, this is not financial advice and is purely my personal opinion.
GOLD has now moved around 100 points from the suggested entry point. The sell off in recent days has been very intense; this is due to the relentless strength of the US dollar, supported by reasonably bullish data releases which support the FED's "higher for longer interest rates" narrative.
There may have been a turning point yesterday.
NFP released, showing a HUGE gain of over 300K jobs, massively exceeding the expected 170K job forecast, however, the picture is not so rosy. On closer inspection, full time jobs were lost, part time jobs were gained and more people seem to be taking on 2nd and 3rd jobs to meet ends meet. A big NFP number is only as strong as the quality of the data.
This may explain why earnings (month on month) were down, but nonetheless, GOLD has surged on this data release as it appears market participants are starting to see the cracks in he US economy.
I am expecting a retracement to either:
1) The RED BOX ZONE: This coincides with the 0.5 FIB of the recent daily wave down.
OR
2) The EXTENDED GOLDEN ZONE: This coincides the zone between the 0.618 and 0.71 FIB levels. This would also serve as a retest of the daily "M" pattern that was formed. While the pattern became over extended in recent days, it is still possible for the neckline to be revisited.
In terms of order execution, you can:
1) Wait for a retest of the GOLDEN ZONE of the 06/10 Daily candle.
2) Place a BREAKOUT LONG above the current PURPLE ZONE, with a SL below either the midpoint of the zone OR below the zone (providing you adjust your lot size accordingly)
3) Enter call positions around this area as it will be relatively low risk.
Please remember, this is not financial advice and is purely my personal opinion.
Note
Also keep in mind, the 06/10 Daily candle for GOLD closed above the previous days high, which is a VERY good sign...Note
Just a final note leading up to market open later tonight:If you are still in a long term short from the original H&S pattern, DO NOT rush to close your short. Wait for a strong bounce from this zone before rushing to make a decision.
Israel and Palestine have re-engaged in combat, and while I believe that the bounce we saw on Friday is more due to the misleading NFP number, this conflict may result in some safety buying for GOLD.
Perhaps we will see a gap tonight, lets see...
Note
Key note:Looking at the monthly chart for the US 10Y, it has appeared to have filled an old gap from 02/07. Can we make the argument that the price structure has been balanced? Perhaps we can.
Remember, gold normally moves inverse to the 10 year...
Note
As noted 5 hours ago, there was potential for a gap up, and that is exactly what has happened. It is likely that - if you are already in a trade - that it can be held till the CPI news release later this week.If you have not been able to enter a position, wait for UK / US open and look to buy on a dip around a relevant pivot point. In this case, R1 is a logical location, but this all depends on buying pressure...
Note
Interesting:cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Chances for another rate hike have now plummeted. Perhaps this is due to the Israel - Palestine conflict? While the situation is unfortunate - and prayers should be made for any victims - no rate hike is bullish for Gold, at least mid term.
Note
Todays distribution of price action - according to market profile - is giving us a "D" day, indicating that price is balanced, and any move lower or high should return to the value zone. For now, be patient.We have already seen some good upside movement today, allow the price to work its magic over the week. We should reach a key decision point on Thursday, when CPI release.
If CPI is stronger, we should see a move down for Gold, however, that may not be as clear cut with war going on. Lets wait and see...
Note
As expected, the distribution for the day started off tame, giving us a "D" distribution. This relates to market profile, and highlights a balanced market, where a trader may want to fade the lows and high.It seems towards the end of the day, we are now seeing a "b" distribution. Expect continued upwards pressure for gold until Thursday when CPI releases, however, buy any dips.
Note
Some of you have asked about Market Profile.it is a tool that EVERY trade should know how to use.
An equivalent tool on TV goes by this name "TPO Market Profile by Kiesoff"
A video on how to read this type of chart can be found here: youtube.com/watch?v=bpravMgflLc
Note
As if 21:45m 09.10, as I was long from the bottom, I am taking some profit here.You may also choose to do the same; potentially you can buy a dip tomorrow at a valid location.
Trade closed manually
Going to close this position here.While the war between Israel and Palestine is unfortunate, unless Iran gets involved in a major way, I don't expect it to have a continued effect on gold at thus current time.
I will be releasing a new post for the coming news events later this week.
Trade closed: target reached
Just posting this again if anyone didn't see.As sound as it sounds, unless Iran intervenes majorly in the current conflict, the market will not care about the war; this means the fundamentals around gold will start again.
Tomorrow we have big economic data releases, that will be decision time...
Note
The red zone has been hit.Remember, all this bullish price action has been in an overall bearish trend.
Manage your risk accordingly...
Note
Golden zone has been hit.DO NOT rush into any positions especially with data releasing in 20 minutes.
Todays outcome will determine Mondays price action.
Note
Data has released...Sentiment is down which will have a bit of a drag on the dollar, however, lets remember that the US still has the strongest economy - especially with how much stimulus money is still flowing in the economy.
5 year inflation expectations are up, no surprise with the current geopolitical landscape. It's interesting, the FED is holding a "higher for longer" stance in terms of interest rates, but will it actually work?
Historically, rates need to be raised above the current inflation level to really have an effect, so I suppose we will need to wait and see.
It is 15:06 UK time as of writing this. There's no need to rush into positions at this time. Wait for Mondays price action and take it from there.
It has definitely been an eventful week of trading. Be grateful for the profits you have made, and remember; bulls make money, bears make money, pigs get slaughtered.
Trade closed: target reached
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.