RSI is getting close to the oversold territory first time in 5 months.
But I don't think the drop is over yet.
This summer gold broke out of the multi year consolidation proving that we are in a bull market. The multi year bear market ended in 2015 December .
The consolidation tried the traders' patience in the last three years but now we know this is a bull market.
Even in a bull market timing is important : at the intermediate and yearly cycle peaks it's good to take profits on the long positions, and buy gold back when the intermediate bottom / yearly cycle bottom is in.
This is what I did a few days ago.
I think the intermediate cycle topped with the false breakout both in XAUUSD and XAUEUR:
When XAUEUR breaks below 1347 and XAUUSD breaks below 1493 a short term bear market will start in both.
What happened exactly in the last few weeks?
On the XAUEUR chart price tagged and marginally broke above the 2012 bull market top.
On the XAUUSD chart Gold tested back the 1556 level which was a very important level during the 2011-2012 bull market top. The breakdown of that level signaled a start of a bear market.
It was obvious that we will take a breather at these points, and my timing tools showed that the intermediate cycle was topping a few days ago.
The last 2 intermediate cycle in gold (XAUUSD) was extremely long and the reason for that was the dollar.
If we are going to have a long intermediate cycle again that would be a end of December / beginning of January bottom. That is what most of the hedge funds and other analysts will wait for and that will be the reason how they miss the first part of the next intermediate cycle. A long intermediate cycle could back test the trendline at 1240. The chance of this scenario is very low:
The most likely that price is going to drop until late November - Invictus is showing a Nov.19. bottom with a tag of the 200 SMA and the upper triangle trendline at around
1350-70$:
And there is also a thin chance of quick drop down to only the 100 SMA at 1389$ before the next intermediate rally starts.
How it will play out will all depend on the fundamentals: China-Usa trade talks, FOMC meeting in September, and of course not to forget Draghi is leaving ...
***This is not a call for a short trade. I'm still short but I shorted gold 30$ higher in this idea: ***
I suggest to maintain that short position in the next few days while price is going lower.
But I don't think the drop is over yet.
This summer gold broke out of the multi year consolidation proving that we are in a bull market. The multi year bear market ended in 2015 December .
The consolidation tried the traders' patience in the last three years but now we know this is a bull market.
Even in a bull market timing is important : at the intermediate and yearly cycle peaks it's good to take profits on the long positions, and buy gold back when the intermediate bottom / yearly cycle bottom is in.
This is what I did a few days ago.
I think the intermediate cycle topped with the false breakout both in XAUUSD and XAUEUR:
When XAUEUR breaks below 1347 and XAUUSD breaks below 1493 a short term bear market will start in both.
What happened exactly in the last few weeks?
On the XAUEUR chart price tagged and marginally broke above the 2012 bull market top.
On the XAUUSD chart Gold tested back the 1556 level which was a very important level during the 2011-2012 bull market top. The breakdown of that level signaled a start of a bear market.
It was obvious that we will take a breather at these points, and my timing tools showed that the intermediate cycle was topping a few days ago.
The last 2 intermediate cycle in gold (XAUUSD) was extremely long and the reason for that was the dollar.
If we are going to have a long intermediate cycle again that would be a end of December / beginning of January bottom. That is what most of the hedge funds and other analysts will wait for and that will be the reason how they miss the first part of the next intermediate cycle. A long intermediate cycle could back test the trendline at 1240. The chance of this scenario is very low:
The most likely that price is going to drop until late November - Invictus is showing a Nov.19. bottom with a tag of the 200 SMA and the upper triangle trendline at around
1350-70$:
And there is also a thin chance of quick drop down to only the 100 SMA at 1389$ before the next intermediate rally starts.
How it will play out will all depend on the fundamentals: China-Usa trade talks, FOMC meeting in September, and of course not to forget Draghi is leaving ...
***This is not a call for a short trade. I'm still short but I shorted gold 30$ higher in this idea: ***
I suggest to maintain that short position in the next few days while price is going lower.
Note
New low.Note
The previous gold idea was closed yesterday but the longer term view is still bearish for the next 1-2 months. I still think we have a date with 1370-1400 in a few weeks.Note
Looks like a flag to me..
Note
All who bought yesterday when I closed the shorts must be ready to jump out of the longs when it tops.Note
Swing in gold.
The DCL was at FOMC night. So this is day 2.
I think this last daily cycle will top sometimes next week and it will be left translated. Then we drop into the ICL.
Note
The pattern broke down yesterday.Note
The neckline not just backtested but we broke above it.Note
It's still possible that we tag 1520 or break it marginally.I might try another short trade there.
This is another reason why you can't trade it like sell the breakdown and buy the breakout. If you trade like that in gold you are going to lose a lot of money.
You need to buy the bottom and sell the top. Easy to say but hard to do.
That's why you don't need to be always in a position in gold. Just playing the good setups.
Note
Plays out as expectedNote
Heroes can short at the trendline. I might post an idea.Trade closed manually
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Related publications
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.