3 Steps to take before entering a trade3 simple and important steps that is required for entering a trade
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Commodities
Seasonality In Commodities As The Spring of 2022 ApproachesCommodities can be seasonal assets. Fuel and nutritional requirements tend to reflect the weather conditions during the times of the year that are cold and when the weather warms. As February ends and March arrives this week, the old saying that March comes in like a lion and goes out like a lamb. The oldest written reference to the “lion/lamb” proverb comes from English author Thomas Fuller, who included it in a 1732 volume of proverbs, “wise sentences, and witty sayings, ancient and modern.” It then passed to many farmer’s almanacs, but the saying is likely much older than the 18th-century reference.
The end of winter- Heating fuel demand declines
The beginning of spring- The driving season in gasoline and injection season in natural gas
The start of the 2022 crop year
The 2022 grilling season is on the horizon
The three reasons 2022 may not be a typical year for seasonality
As the weather warms over the coming weeks, the supply/demand equations for a host of commodities will shift.
While seasonality offers opportunities to traders and speculators in the futures markets, prices tend to adjust far before the seasons change each year. Moreover, in 2022, the economic and geopolitical landscapes suggest that traditional seasonality could go out the window.
The end of winter- Heating fuel demand declines
In a typical year, the end of the winter season is when futures markets are already reflecting spring pricing. As March begins this week, refiners tend to produce less heating oil, and the natural gas demand remains high, but the markets see the light at the end of the peak-season tunnel.
A monthly chart of the heating oil crack spread, a proxy for other distillates, including diesel and jet fuels, often weakens in March. While distillates are year-round fuels, heating oil production usually declines in March anticipating a decline in heating oil demand.
Historically, natural gas tends to reflect the prospects for milder weather during the spring months in March. Natural gas reached annual lows in February, March, and April in 2012, 2016, 2017, and 2021.
The beginning of spring- The driving season in gasoline and injection season in natural gas
The spring and summer seasons are when people tend to put more mileage on their cars as the weather improves. Gasoline demand tends to increase at the end of the winter as refiners shift from distillate to gasoline refining.
The monthly chart shows that gasoline processing spreads often move higher and peak during the spring and early summer months.
Each year, the natural gas market moves from the withdrawal to the injection season during March. As production begins to flow into storage across the US, the supply-demand equation shifts, and prices tend to decline.
In June 2020, natural gas fell to the lowest price in twenty-five years at $1.432 per MMBtu at the end of the second quarter.
The start of the 2022 crop year
As the snow melts across the fertile US plains and other crop-producing countries in the northern hemisphere, farmers begin to plant the new crops in March and April. The early spring marks the time when uncertainty about supplies peaks as the weather during the growing season is the primary factor in crop production each year. Grain and oilseed prices tend to rise during the spring and early summer as Mother Nature determines the weather conditions that determine the agricultural products that feed the world.
The monthly chart of CBOT soybean futures shows that prices often move to annual highs during the spring and summer months.
Uncertainty over the corn crop often pushes prices to highs during the spring and summer each year.
Wheat prices display the same seasonal pattern. Wheat is the primary ingredient in bread, a critical source of nutrition for nearly eight billion people.
The beginning of the crop season is when supply concerns start to increase as prices become as fickle as the weather over the coming months. The fear of drought or floods is always a key concern as the seeds go into the ground.
The 2022 grilling season is on the horizon
Each year, the US grilling season lasts from late May and the Memorial Day weekend through early September and the Labor Day weekend. As barbecues come out of storage across the US and family and friends gather outside, the demand for animal protein tends to rise. Futures markets tend to move higher as animal protein producers deliver cattle and hogs to processing plants in the spring to meet the increased summer requirements. Cattle and hog futures prices tend to move higher as the grilling season approaches and hit seasonal lows as it ends.
Live cattle futures often display seasonal strength in the spring and summer and weakness during the fall and winter months.
The monthly chart shows that feeder cattle futures tend to display seasonal strength during the grilling season.
Lean hog futures display the same seasonal trading pattern in many years.
The three reasons 2022 may not be a typical year for seasonality
While seasonality is a critical factor for energy and agricultural commodities, 2022 is anything but an ordinary year in markets across all asset classes. At least three factors could cause markets to exacerbate or ignore seasonality over the coming months:
Inflation is at the highest level in over four decades, causing prices of all goods and services to rise. Commodity prices continue to trend higher, despite the Fed’s plans to increase interest rates. The central bank remains far behind the inflationary curve, which is likely to continue the bullish trend.
Russia is a leading commodity producer, supplying Europe and the world with metals, minerals, energy, and agricultural products. The Russian invasion into Ukraine led to significant sanctions, which could cause embargos, and supply chain bottlenecks, causing price distortions as availabilities decline.
Markets reflect the economic and geopolitical landscapes. We have not experienced the current level of uncertainty in decades. The technical trend in most commodity markets remain higher, and the trends are always your best friends.
Seasonality is likely to take a backseat in the current landscape. Market participants should expect the unexpected over the coming weeks and months as price variance is likely to remain elevated. Approach all markets with a clear plan for risk and rewards and stick to that plan. Never allow a short-term risk position to become a long-term investment because the price moves contrary to expectations.
Seasonal factors are always critical in all raw material markets, but in 2022, inflation and geopolitical tensions are trumping the weather as the winter comes to an end.
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Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
What is going on in the markets? Aftermaths of Russian invasionRight after Russia declared war and started its military operations in Ukraine, the markets started going crazy. Investors started moving to "safe heaven" trades and sticking with "risk-off" securities.
GOLD (XAU/USD) is everyone's favourite to trade for the moment, as the price plummeted straight after the escalation of the war. It has experienced a growth of +4.5% so far, and it has more upside potential.
EUR/USD, having a strong negative correlation with GOLD, has endured a 200 pip drop so far, constituting a 1.8% dip. AUD/USD, GBP/USD and other highly correlated USD pairs have deteriorated as well.
BITCOIN, often claimed as "digital Gold", is still continuing its downside movements, experiencing a 12.6% drop in 24 hours.
Sticking to the safe heavens and riding the trend would be the best possibility right now. Also, remember to stay risk tolerant and cold-blooded, as the markets could get really volatile from time to time, taking into account the current situation.
Charts can really help during periods of uncertaintyRussia invades Ukraine is the headline and every market in the world it feels like is moving and it is very easy to feel overwhelmed almost to the point of panic, a very quick glance around the markets can see that gold is up, stocks down, the US Dollar is up, and oil looks to be heading above 100.
It's hard to know where to focus one’s attention or even where to start and it really helps to be able to just look at some charts and put some of these moves in context. Yes, the price of Crude Oil is high, but it’s been higher – back in 2011 and 2012 it was regularly above 110 and in 2008 we were a lot nearer to 150.
The stock markets are down a lot, take a look at a chart and see where the support is – I wrote about this recently. For the S+P, the base of the cloud is nearer to 3875…the 200-week ma is down at 3387. By the way a good thing to note is that during periods of uncertainty that markets tend to mean revert to their long-term moving averages and in particular I like to watch to 55 and 200- week moving averages – if you are not a sophisticated chart watcher – no bother, if you just know where these 2 moving averages are you can use these as a proxy for a target zone.
The 2020 high on gold was nearer to 2030 BUT we know that gold is in a long term up move and the chances are we are going to make a new high. What do we use if we are in all-time highs for targets, there are many techniques - Fibonacci extensions, point and figure (probably my favourite), channels, and patterns to name but a few are all ways to give you upside targets. I have a Fibonacci extension on the topside at 2110 ish, but I also have another more important target nearer to 2150.
So, my advice is do not panic – LOOK AT A CHART!!
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
My Trading Strategy in 4 simple steps.Today I will explain step by step the process I use to develop setups. This is how my strategy works. And this can be applied to any asset and using any technical tools. This is as close as I can get to using an empiric approach to define my trading opportunities. Let's start.
My trading strategy is composed of 4 steps:
1) Whats the context of the price? Here, I want to understand all the characteristics of the current situation I'm observing. Mainly I will try to define this in the Daily chart.
Examples:
* Are we making a new ATH?
* Are we inside a 300 days correction?
* Is the price above or below a Daily trendline?
* Are we inside a small correction or a 50%+ decline?
2) Now that I understand my context. Can I look for similar situations in the historical data of this asset?
I only work with assets with enough historical data to conduct this type of analysis. If I'm able to find at least 2 previous situations with similar characteristics to what I'm looking for, I proceed with the next step. Here I use the Weekly and logarithmic chart to identify these situations.
3) Do I see a consistent pattern that I can use to trade in those similar situations in the past?
Here I will use lower timeframes like the 4HS chart, and I will look into more details in those similar situations. I will try to find something objective, like "The first retest after the breakout of the most external line of the corrections. If I see consistent behavior and a good risk to reward ratio, I will proceed with the final element of my strategy.
4)Define the pattern I'm waiting for and the execution process in advance.
At this stage, I want to say, "I'm waiting for this," and this is how I will trade it. This includes:
*Entry level
*Stop level
*Break-even level
*Take profit level.
*Risk.
And this is it. At this stage, my setup can be executed or canceled depending on the price behavior, but in a nutshell, this is the system I have been using for the last 3 years, and I can say that this has, on average, a win rate of 50% and an average risk to reward ratio of 2.
I hope this information was useful. Feel free to share your view in the comments or any doubt you may have. Thanks.
Why gold is the king during all kinds of crisis? You might have heard a lot of things about the benefits of investing in gold these days. Gold has been called the best and the king of investment, or it is no longer worth investing in because it will not grow anymore. Gold will remain king forever in investing, let me explain why.
The price of gold will increase in the coming days but will not decrease in the same way as the world is moving towards the day. The Corona Pandemic and the Russia-Ukraine issue, in particular, have shown it with our fingers in the eye.
There are a thousand reasons why investing in gold can be explained. Why investing in gold is safe and profitable. I will try to explain some of the significant reasons that can easily inspire you to invest in gold.
Some put their money into stocks, bonds, and real estate, but what does it give them? Gold has gone through many ups and downs and still has a long way to go.
There’s no limit to how much you can own with stocks and bonds. With gold, there’s only so much that can be mined or dug up from the earth, which means you won’t be seeing any inflation on your value as time goes on.
Inflation with stocks and bonds creates losses in value over time if your investments don’t keep up with price fluctuations.
Gold has always been called the best investment during a crisis.
Gold has been called the best investment globally, but you have to do your research before you put your money in an unknown commodity like gold. Researching gold will give you an idea of its value over time. You can also check other websites to find out what others think about gold and how it stacks up against other investments. There are lots of benefits to investing in gold.
There are several different types of investments, such as stocks, cryptocurrency, and bonds, that have many risks involved because they go up and down with market fluctuations.
With gold, there’s no chance for significant fluctuations. Rather than that, gold is more stable and less volatile and follows proper rules. It’s always worth the same amount, which makes this type of investment safer than others.
During Corona Pandemic in the last two years, we have come to realize this very well. Although stocks, bonds, and cryptocurrencies have risen in value since the beginning of the Corona, over time, everything except gold has seen a bubble up.
No asset other than gold has been able to sustain them. If you look, Nasdaq has dropped about 15% since November last year. The shares of Apple, Microsoft, Google, Tesla, PayPal, Facebook, Amazon, and almost all the big companies have dropped hugely. Cathie Wood’s ARKK fund illustrates the beating that mid-to-large cap tech has taken. It’s down 58% since last February and 47% since November.
You will be more frustrated when you look at cryptocurrencies. Most cryptocurrencies have lost much of their value. But gold has surpassed everything and has only risen to the top, giving investors a stable profit.
Gold is a hedge against inflation.
Gold is a hedge against inflation because you would still own an amount that could be sold today even if it were to lose value.
Gold is a hedge against inflation because you would still own an amount that could sell today even if it were to lose value.
Inflation has started rising a few days after the Pandemic. Since the Pandemic has caused a lot of business losses, inflation has naturally increased, and economic growth has slowed down.
As inflation rises, central banks naturally try to control inflation by raising interest rates. Typically, if the bank rate increases, the gold price drops. But if the economic uncertainty increases, then the gold price does not drop that way but the reverse increases.
We have seen that gold has been a hedge against inflation in the last few months. Although almost all the assets have lost their colossal value, gold is still rising due to inflation. I think during inflationary pressure investment in gold is a good choice.
Gold will be valuable for a long time.
The value of gold has been on the rise over the years, and so will the return on your investment. Gold is a hedge against inflation because you would still own an amount that could be sold today even if it were to lose value.
Inflation has started rising a few days after the Pandemic. Since the Pandemic has caused a lot of business losses, inflation has naturally increased, and economic growth has slowed down.
As inflation rises, central banks naturally try to control inflation by raising interest rates. Usually, if the bank rate increases, the gold price drops. But if the economic uncertainty increases, then the gold price does not drop that way but the reverse increases.
We have seen that gold has been a hedge against inflation in the last few months. Although almost all the assets have lost their vast value, gold is still rising due to inflation.
Gold is a haven in times of crisis, such as war, economic instability, or natural disaster. It’s also an excellent investment to make when you require extra cash or need to protect your wealth from inflation while the market crashes or fluctuates wildly. If you want to get long-term profit, investment in gold could be a good choice.
Gold is Formidable
Gold is formidable because it has a long way to go before reaching its final value. Gold is still new and doesn’t have the same recognition as other investments. So, you could consider gold an investment option for now until it becomes more widely known and eventually becomes even more valuable.
If your investments don’t keep up with price fluctuations, you are losing value over time. But with gold, since there’s only so much that can be mined or dug up from the earth, your value will gradually increase over time without any risk of loss in value.
As mentioned before, gold is currently an unknown investment and might not be recognized or valued by many investors yet. With this in mind, if you’re looking for an option that doesn’t require too much work and isn’t too risky, then gold is an excellent option to think about investing in today. You can’t deny investment in gold is more formidable than investing in another asset in the current time.
The Amount Of Gold Is Limited
You can’t make gold in the laboratory or the factory even if you want to. So gold stocks are always limited. Many of us say that bitcoin cannot be made arbitrarily, so the price of bitcoin will exceed one million dollars.
Cryptocurrency has not been created for many years. So it cannot be said yet; this is the last word. And Bitcoin is not the only cryptocurrency on the market. For the sake of argument, bitcoins can no longer be made after a certain amount, but there are now over 6,000 cryptocurrencies on the market, all of which are being used as alternatives to one another.
But since the days of gold, gold has been used as a medium of exchange. What is the alternative? No answer. You might say that there are money notes as an alternative to gold.
Wait! Money notes have no instinctual value like gold. It’s just a piece of paper. Its value is also different in different countries. Maybe the money of one country cannot go to another country. But gold runs all over the world, and it has instant value.
Gold is a safe haven asset.
Gold is a safe haven asset. While the price of everything goes down during any crisis, the price of gold goes up in reverse due to its peak demand as a safe haven.
Gold prices have risen almost all the time since the 1970s, according to the Economic and Political Crisis. You don’t have to look too far. Just look at the 2008 economic crisis. See the chart above.
The economic crisis began in late 2008. When the economic crisis started, the price of gold was 670 / ounce. It took almost three years to overcome this economic crisis. And in these three years, the price of gold has risen by about 1230 USD, which is 12300 pips in pips.
Let me make it a little easier for you when Corona Pandemic started in early 2020, the price of gold rose by about 614 dollars per ounce in 6 months, 6114 pips per pips. See the chart above.
Overall, gold is the only asset that is truly a safe haven asset. Now you can say the price of bitcoin went up more, then? Wait! Bitcoins are not as stable as gold. Too risky, too volatile. Just as bitcoin has risen, so has it. You should never invest in such a risky and high volatile asset as an investor. And yet you see gold is about to rise later.
With stocks and bonds, there is always that chance for financial ruin. You could wake up one morning to find out that the company you’ve put all of your faith in decided to cut their production or even just close their doors. But gold will never fail you because those factors do not affect you.
This makes it easy to compare prices with other investments, like stocks and bonds, because they keep changing over time, so it can be hard to figure out what they’re worth at any given point in time.
Gold is easy to cash.
If you cash in your gold, you can get your money back, even if it’s just a few years later.
Another good aspect of gold is that what can readily cash gold. You need cash now, and you can sell it instantly if you want. The money of one country may not go to another country, but if you have gold, you can quickly cash it.
If you have gold, you can quickly get a bank loan against those goals and very fast. Gold can also be invested in many aye, such as physical gold coins, bars, or gold bullions. These are very easy to cache.
Gold Stocks, ETFs, Gold Options, Gold Bonds, Sovereign Bonds, Gold Funds are some of the more options you can easily invest and cash in, which is often not possible with other assets.
Cryptocurrency transactions are not allowed in many countries of the world. But there is no country where gold transactions are prohibited. It is easier to cash in on gold than on any other asset, and the options for investing in gold are more than any other asset.
What happens when the stock market crashes? The value of your stocks and bonds will drop and leave you with debt or even bankruptcy, but with gold, you can still have peace of mind that you are financially stable.
Central banks reserve gold
Almost all the countries in the world have more or less gold reserves. The United States itself has more dollars in reserves than other countries. That is America but the number 1 country in the gold reserve.
America also knows very well that this paper money will not be of any use in case of danger. Commodity and gold are the hope then.
The United States has imposed economic sanctions on many countries in its interest. Those countries support their economies with this gold. And they deal with the outside world either with gold or their home currency.
And the more gold reserves a country has, the more foreigners come to that country. External investors do not feel the risk. Because outside companies think they can easily take the profit after investing.
And day by day, America is imposing an economic blockade on different countries. That day is not far away. Different countries will reduce their dollar reserves and not use gold or home currency.
However, it is safe to say that gold will soon gain the confidence of many countries as a reserve currency and will use gold as a medium of exchange, excluding the dollar.
Conclusion
Gold is a safe haven for the world’s currencies. It’s not just a valuable investment, it’s a hedge against inflation, and it’s an excellent way to save for retirement. Given that the amount of gold is limited, it’s not going anywhere anytime soon. And if you’re looking for an investment that is easy to sell when the time comes, gold is your answer.
BTC FAIR MARKET VALUE IN RELATION TO VOLATILITY VS. GOLD. Came across this article which confirmed what I long suspected. The more institutionalized BTC becomes the more it's volatility decreases and value increases but there is a cut off. Fair market value will always be in the forefront as far as an investment grade asset. BTC overtaking gold is highly unlikely in our lifetime. At present, there is in global circulation roughly $11 TRILLION in gold. Compare that to BTC where all the bitcoins in the world were worth roughly $1.03 trillion. Bitcoin is worth only about 9% of the world's gold supply. The combined value of bitcoin was equivalent to just 2.9% of the world's money.
JPMorgan says its long-term bitcoin price target of $150,000 is unlikely as surging volatility challenges institutional adoption.
Bitcoin's "fair value" is 12% below its current price, based on its volatility in relation to gold, according to JPMorgan.
The bank's analysis was made on the assumption that bitcoin is four times as volatile as gold, strategists led by Nikolaos Panigirtzoglou said in a note Tuesday. In that scenario, bitcoin's value would be one quarter of $150,000, or $38,000, they said.
But if bitcoin were only three times as volatile as gold, then its fair value would be around $50,000, they added.
Bitcoin last traded 1.8% higher on the day around $43,564, close to its highest for a month, but is still down 8% so far this year, according to data from CoinMarketCap.
JPMorgan's long-term price target for bitcoin is $150,000, up from last year's $146,000 target, assuming that its volatility level meets that of gold, or bitcoin allocations get the same weighting as gold in investor portfolios.
But the bank thinks this target is unlikely to be reached any time soon, given that such a neat intersection between gold and bitcoin may not happen in the foreseeable future.
Bitcoin has had a rough start to the year, with the overall cryptocurrency market slumping, as appetite for risk assets waned against a backdrop of persistently high inflation and the Federal Reserve's increasingly hawkish stance. The leading cryptocurrency fell below $36,000, and ether tumbled below $2,500 — both off from record highs of around $63,000 and $4,800, respectively.
One of the major drivers for crypto in the last two years has been the huge amounts of cheap cash that has emanated from fiscal and monetary stimulus programs during the pandemic, and much of that is now coming to an end.
JPMorgan said January's crypto market correction, in which bitcoin lost 17% in value, looks less like capitulation, or an extended period of decline, in comparison to last May when bitcoin fell 35%.
Still, strategists said the biggest challenge for bitcoin is its volatility, as it's often unappealing to institutional investors.
JPMorgan said cryptocurrencies are seeing hot growth relative to other alternative asset classes, but this doesn't have to stem from continually rising prices.
"This growth does not necessarily need to come from continuous price appreciation of existing cryptocurrencies such as bitcoin and ethereum, already popular among institutional investors, but in our mind it is more likely to come from the expansion of the universe of digital assets," the strategists said.
GoldViewFX - 30M CHART SCALPING STRATEGY IN ACTION LIVE $$Hey All,
This is a follow up post from the 20 pip scalping strategy we posted (SEE RELATED POST BELOW). This chart shows you live examples of the entries and exits today.
Remember when scalping with this strategy SL to be set for exit when EMA5 reverses and crosses back the opposite way. Tight stops and a numbers game, so please back test aswell. I have back tested this and the wins over SLs always been profitable over my trading periods.
When we refer to floating candle, we mean floating away from MA21. It can still touch EMA5.
Please don't forget to like, comment and follow to support our work, so we can bring you more quality content.
GoldViewFX
XAUUSD TOP AUTHOR
Complete Macro AnalysisHello everybody! This is a follow up on my 6-part traditional and crypto market analysis, yet everyone that reads this one will benefit greatly, regardless of whether they've read any of the previous analyses or not. Over the last week I provided some updates on each part, however it currently makes more sense for me to make a brand-new holistic analysis, rather than provide small updates on each part. This one will be focused entirely on traditional markets, while the next one will be focused entirely on crypto.
In order for anyone to have a better idea of where markets might be headed next, it is best to start with the bond market. Bond yields have been rising across the world and across the entire curve, with the big distinction that lower duration bond yields have been rising significantly faster than long term ones. The main reason that this is happening is that bond markets are expecting Central banks to raise rates a few times in the next 1-2 years, but don't believe they can do anything more than that. Essentially the market sees inflation being transitory, that the global economy is in a bad shape and that Central banks are in such a terrible spot, that by the time they raise rates a few times, they will be forced to start cutting them again.
Based on the charts below, it is clear that bond yields are still in a massive downtrend. The 10y yields have started hitting resistance, while yesterday we got the first rejection at resistance due to the Russia/Ukraine news. It is pretty normal for people to seek safety at times like this, by buying bonds (bond yields and bonds are inversely correlated). So, as you can see on the third chart, the minute bonds got to support and the news started coming out, the bond market bounced. Although I wish that war between Russia and Ukraine doesn't happen, and actually believe it won't happen, in case that it does happens, the Fed gets some room to not raise rates. For many reasons that I mentioned in the previous analysis, it is clear that inflation will come down significantly in 2022 and there is very little the Fed could do about it anyways. Therefore, any excuse they might be able to use to not raise, they will probably use it. Having said all that, bonds are still in a short to medium term bear market, and could fall another 5-10% before they put in a final bottom (yields going up by 0.5-1% from here).
Now the situation between Russia and Ukraine doesn't affect markets just because it affects the psychology of people or because governments print money to cover expenses of war. There are several severe implications around trade and resources, as a lot of trade especially between Europe and Russia could stop, while Russia is a major exporter of commodities, primarily of Oil and Natural Gas. Europe and the entire world were already facing serious problems around energy, and this could make things even worse. Again, for many reasons mentioned in the previous analysis, there isn't enough oil above ground or oil production to cover the needs of the world at reasonable prices. OPEC isn't even able to meet its production increase goals, let alone be able to handle Russia not giving oil to the rest of the world. Oil is already pretty expensive relative to where it should be given the current state of the global economy, and based on the charts it could go significantly higher. So far, the market has behaved as I had expected, with a rise up to 92-93$, a pullback and now another push higher. It's not yet clear if the current situation will boost oil prices above 100$, but it is certainly possible. In the short term it is easy to see a mini 'speculative shock', that could send crude up to 115-120$, only for it to then come all the way down to 75$ and find support there.
What is interesting to note is how Gold has been able to hold its ground for so long, despite bond yields going higher. Not only that, but it currently sits above all major moving averages and pivots, while it has also broken above its key diagonal resistance. The truth is that the breakout isn't as decisive as one might have expected based on the news that came out on Friday, hence it might be a trap. It’s clear that the breakout was heavily affected by the the Russia/Ukraine news and that could be the catalyst for a gold bull market, but it’s still prudent to be cautious. What is even more interesting is that Gold has gone up, while most Central banks are raising or plan to raise rates, and while the USD has been going up since early 2021. In my previous analysis, I mentioned how I thought gold going up or down is more like a coin toss, as there is a strong case to be made in either direction. Some people took that as me being bearish on Gold, while what I had said was that above 1930-1940 gold might be tremendous for going long. Personally I prefer to buy strength and simply sacrifice some gains, in order to avoid being stuck in a trade that doesn't do well.
A few weeks ago, the ECB hadn't even talked about raising rates, but now they have. Right after the Fed meeting the EURUSD pair had a major reversal that accelerated when the ECB started turning hawkish. My initial thought was to watch Gold closely, as now 3 of the 5 major Central banks are raising or talking about raising rates, yet gold remains strong. At the moment EURUSD has been rejected at resistance with an SFP, yet it still has some room to the upside. It's above the 50 DMA and the diagonal, so if everything goes well and tensions get resolved peacefully, the pair could easily get to 1.15-1.17 by the next Fed meeting. The USD seems to already been losing steam as the yield curve is flattening and there are already 7 rate hikes being priced in. Hence the ‘real’ news isn’t that the Fed will raise rates by 0.25% in an emergency meeting or that it will raise rates by 0.5%, but that the ECB might raise rates after an entire decade, as well as that all Central banks will be forced to cut rates relatively soon.
Therefore, this gold strength could also be an indication that many investors are betting on a policy error by Central banks, which might be forced to reverse course faster than people expect. What people need to know, is that gold doesn't behave like most people think it does. Gold in our age, is more like an error/catastrophe hedge, that tends to follow real rates. For example, today Gold could benefit from two things: 1. A war is definitely a big boost for gold, as people might want to own it because it is of limited supply and has no counterparty risk, and it can easily be owned anywhere. Countries that go to war tend to devalue their currency or even seize assets, or that country itself could be excluded from the global financial system, like being kicked out of the SWIFT system. In such a situation gold tends to offer tremendous certainty, while nothing else really does, not even US treasuries. 2. When Central banks are cornered or have no real control over a certain situation. Currently it is obvious that Central banks are trapped, and that there is another major 'catastrophe' lying ahead. The world is stuck in an environment of low growth and too much debt, with markets being significantly overleveraged. None of the problems over the last 20-30 years have been solved, only papered over, hoping that the system magically heals, with the last 13 years alone being full of examples of them always acting late. Finally, the key reasons why gold hasn't done well during a situation of deeply negative interest rates, is that 1. Gold had rallied significantly since 2018, 2. There were lots of different, more compelling opportunities out there, 3. Everyone was already prepared (nobody else to buy + people had to sell gold as inflation increased to covered other costs, essentially using their insurance), 4. Most of the inflation wasn't caused by the Fed / Central bank actions.
After having gone through all of the above, it is definitely time to talk about stocks. Once again I’ll focus on the top 3 US indices, SPX, NDX and RUT, as they can give us a pretty good idea of where stocks are headed globally. In my previous analysis I mentioned how I expected a bounce, a dip and then another bounce, which all pretty much played out based on my technical analysis, with one exception. The last move up was shorter than initially expected, however even based on my tools I was probably 'too optimistic'.
Starting with the S&P 500, we can see how the bullish channel was broken and significant downside followed. Then the market had a strong bounce off the 300 DMA + horizontal support. After the bounce it got rejected on the 100 DMA + diagonal resistance + horizontal resistance, and fell down to the 200 DMA where it bounced. What is odd to me is that the bounce ended with a double top, rather than getting up to the 50 DMA and test the diagonal, while forming an SFP. A double top there is somewhat bullish in the short term, as it is an area that the market will probably break before making new lows. At the moment the market is sitting right at the Yearly Pivot but has broken below the 200 DMA, a situation that is neither very bullish or bearish. As a whole the momentum is indeed pointing lower and this isn't a great picture.
In turn the Nasdaq 100 is actually looking much worse than the S&P 500, as a lot of the big tech behemoths have been taking several big hits recently. Slow growth, higher inflation and higher interest rates, are definitely not beneficial for these companies. For example, we saw a massive gap down for Facebook after a disappointing earnings report, a gap similar to what happened in June 2018, with the NDX going down 19% from that point in the next 6 months. Tech stocks have massively outperformed everything else since 2009, and pretty much everything compared to where they were in Feb 2020, so it is normal to get some extra weakness in this index. At the same time several parts of the stock market started peaking throughout 2021, with mid Feb 2021 being a major inflection point. At that time many unprofitable tech related companies had reached bubble territory and started reversing, but the effects of their valuation getting crushed started having an impact on NDX three months ago.
The third index and final index is the Russell 2000, which looks like it was in distribution for about 10 months, while a few days ago it had a throw back into resistance. The RUT had a really strong breakout in Nov 2020 and by March 2021 it was up 35%. Then in September it formed a clear bull trap that led to the major leg down. Once the 2100 support that was tested multiple times for about a year was broken, it became clear that more downside would soon follow. At the time of my previous analysis, I mentioned that we'd probably see the Russell retest that support and flip it into resistance, which happened as expected. Now the index is below all major moving averages and Pivots, and is still looking bearish, even though in the short term it has shown a decent amount of strength. Until it reclaims 2250, it remains in bearish territory and it is probably best to avoid going long,
Based on all the above, things overall aren't looking great. At least not in the short to medium term, for the economy and the stock market. Central banks are trapped and most investors are aware of that, and now there is an extra variable, that of the conflict. So the question then becomes, if everyone is aware of all of this, couldn't the market simply go up from here? Aren't lots of these things priced in? Aren't wars said to be good for the stock market? Well, like I mentioned above all of these are correct. It is true that due to the conflict we might see bond yields roll over and we get more stimulus from central banks and governments, both of which could push stocks higher. However, in the short term there is a lot of uncertainty due to the way many things will get disrupted in the world. Because of that gold and oil could go ballistic, hence they are the best bets at the moment. It is probably best to stay away from stocks for now, as their potential downside is substantial, while their potential upside is limited as they need some time to recover. Nothing in the charts really suggest that they are ready to go up hard any time soon. Let's also not forget that stocks would have eventually deflated to an extend, regardless of what the Fed or what happens in the world, as the 2020-2021 frenzy couldn't last forever. Of course this doesn't mean that I believe a major bear market is in play right now, just that the SPX could eventually get to 3900-4000 in the next year, that the NDX will test its major log diagonal and that the RUT will its 2018 highs. Although I don't know how or when we get there, to me the most likely scenario is that within the next 2 years bond yields will collapse and the government will be forced to spend a lot, while the Fed is forced to cut rates and do QE. Even if the yields don't collapse and inflation goes rampant, the US government will still be forced to print and spend a lot, something that would make the problems worse.
In conclusion, despite the fact that I was mostly bullish on stocks and oil through 2020-2021 and neutral-bearish on gold, my stance now remains bullish on oil (buying dips anywhere from 55-75$), neutral-bullish on gold and neutral-bearish on stocks. For me to turn bullish on stocks again, I'd either need to see certain levels get to the downside or reclaim certain levels to the upside, or some extreme action by central banks or governments. In terms of US bonds and the US Dollar, the picture is not as clear. In early 2021 I was bearish on bonds, but after that I was bullish as I didn't really expect the Fed to raise rates and thought bonds were significantly oversold. Even if I wasn't expecting the Fed to raise rates, the USD was also extremely oversold and none of the issues of the financial system had been solved. The world was still short on dollars, what the Fed and the government did was too little and at the same time everyone printed. In the current environment, on the one hand bonds are in major downtrend and the USD is in a major uptrend, and on the other hand both might have reversed after hitting major inflection points. Hence it is probably better to either go with the trend or simply wait a bit until the market gives us a clearer picture as to where it wants to go next.
Thanks a lot for reading and good luck with your trading! :)
Fib retracementDrop down your thoughts, concerns, questions.
Comment what you like about this video.
Thank you :)
I hope that i am able to give some value.
BOS - BREAK OF STRUCUTRE ✅✅✅🎯 WHAT IS BOS ?
BOS - break of strucuture. I will use market strucutre bullish or bearish to understand if the institutions are buying or selling a financial asset.
To spot a bullish/bearish market strucutre we should see a higher highs and higher lows and viceversa, to spot the continuation of the bullish market strucuture we should see bullish price action above the last old high in the strucutre this is the BOS.
🎯 BOS for me is a confirmation that price will go higher after the retracement and we are still in a bullish move
Kindly see attached photos
HTF intention with LTF execution 📉📉📉🎯 I will try to explain how do i use HTF in order with LTF.
✅ HTF - higher time frame usually those are timeframes that are higher then H4 like D1,MN1.
✅ LTF - lower time frame usually those are timeframes that are lower then H1 like M30,MAT,M5
When i take trades i wait for price to approach a HTF POI and then zoom out on LTF to find a better risk-reward entry like the photo says HTF intent LTF execution helps you to get a better risk-reward ratio and a higher probability trade, this is working on every financial asset from crypto to forex to commodities and stock market
✅ POI - POINT OF INTERES an area in the market where price have a higher probability to go bullish then bearish lets say 70/30 % probability.
Example price come into a ,,support,, area this means we have a BULLISH POI we have a better probability to go higher then lowe
Seasonal Futures Market Patterns Gold & SilverHey traders today I wanted to go over the best Seasonal Patterns in the Gold & Silver Futures Market. Gold & Silver and other precious metal markets follow an annual reliable seasonal pattern due to supply and demand . Knowing when to find these seasonal market patterns on your charts can really benefit us in our trading.
Enjoy!
Trade Well,
Clifford
Big Four Macro Overview: Part 5For more detail please refer to the first four pieces in the series (linked below) and the accompanying charts.
Markets entered 2022 with well established trends and trading ranges, but I believe that the coming year holds significant potential for change. This is particularly true in the equity and treasury markets. Because much of the outlook hinges on inflation (see below) it will be particularly important to monitor inflation related markets.
Importantly, while it's easy to make the case that rates should rise significantly this year, modern financial history suggests that rising rates are likely to break the most vulnerable financial link. If that link has the ability to create systemic disruption, rates will fall again, even if inflation is high, as the market runs to the quality of treasuries.
In my opinion, the most important trend of the last four decades has been the decline and subsequent quiescence in the inflation rate. Falling and low inflation allowed Treasury rates to decline. Falling Treasury rates supported equity valuations and home prices. They also enabled the wholesale financialization of the economy and allowed both public and private entities to add leverage without consequence. Importantly low and steady inflation also created the negative correlation between treasury and equity. Without that correlation 60/40 and risk parity strategies may well be in danger.
Inflation: My working thesis has been that many of the trends that supported disinflation have reversed and that rising inflation will act as a headwind to investment for the next decade. Going into 2020 I believed that the stage for higher inflation had already been set and that higher inflation would result in higher rates and ultimately equities.
Consider that in early 2020:
• The output gap had closed for the first time since the Great Financial Crisis.
• The economy had just reached full employment with a U-3 Unemployment rate @ 3.5%.
• Wages as measured by the Employment Cost Index were rising @ +4.4% YOY rate.
• The Cleveland Fed Median CPI had recently set a 10 year high.
If not for the pandemic, by early 2021. the Federal Reserve would have been forced to respond to rising inflation by increasing rates. Instead, Covid crushed the demand side of the economy, derailing the growing inflation. Now the extreme fiscal and monetary response combined with disruptions in logistics and labor have combined to create very high inflation. While I think that many of the issues creating this burst of inflation are moderating, the same set of factors that were reversing in 2020 are still in place. In short, I believe that the broader trend has changed and that when everything settles out, will end up significantly in excess of the Feds 2% average target.
Bottom Line: Above trend growth in inflation and monetary/fiscal tightening suggest higher volatility and a significant chance that many of the trends that have defined the last few decades will falter. My sense of the economy is that the best growth has already occurred as the result of historically supportive fiscal and monetary policies and now both paths are turning restrictive (see the second part of this series for a more in depth discussion) and markets will likely reflect that reality.
Rates:
• Bonds remain in a bull market defined by a broad declining channel, but rising inflation could easily change the trend. The most likely catalyst to end keep rates below 3.25% would be a financial accident created by higher rates.
Equities:
• SPX remains in a technical bull market and there are no overtly bearish behaviors evident in the longest perspectives. However short term weakness can easily morph into a bear market.
Commodities:
• Goldman Sachs Commodities index is in the center of a broad 14 year range, bounded essentially by the low set during the financial crisis and the resultant 2011 high. range. The most notable/useful current chart feature is the clear uptrend from the 2020 pandemic low. Until that uptrend is broken, the most immediate trend is to higher prices.
US Dollar:
• The wide macro range, 70.70 - 121.02 has contained price action over most of my trading career but volatility is more cyclical than price. These periods of low vol. set up conditions that often lead to explosive moves.
Now, back to the charts!
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
Knowing when NOT to trade is also important | XAUUSD Today we will take a look at XAUUSD. I really like this asset to trade because of the consistent trends it provides, which are great for swing traders.
When you are executing a swing strategy , the main thing is avoiding choppy conditions and increasing the odds of developing setups on situations where you may observe clean trends from point A to point B.
In this situation, I want to show how I'm currently thinking XAUUSD . Since MAY 2021, the price has been moving sideways on an average price of 1800, going up and down. This is the type of situation where I don't want to develop swing setups because I'm not observing trending behavior. That's why NOT trading is protecting my capital from low-quality setups. The better you become at waiting for perfect scenarios, the higher the odds to engage on high-quality trades that provide a clear edge after several executions.
As you can see, I have defined the current area between the support and the resistance as "Bad zones for swing setups." And I have defined the support and the resistance zone as "good levels for setups" Why?
Because as I explained before, in the current area, we are not observing clear trends for us to develop swing setups. That's why we need to wait for the price to make contact with key levels (support and resistance). It is from these key levels that 2 things may happen: the price will break it or bounce. As we are working on a weekly timeframe, these situations will not occur in a few hours, it will take days until the resolution of the direction. That's why if you do your homework, you can get ready to react in the best way once the price reaches these zones where we will tend to observe some reactions and the beginning of a new movement.
My current plan is this:
IF the price reaches the support zone at 1680, I want to start thinking in bullish setups towards 1900 or bearish setups towards 1450
IF the price reaches the resistance zone at 1900, I want to start thinking in bullish setups towards 2070 or bearish setups towards 1680
I hope this post is helpful to better understand the difference between good and bad zones to develop setups. Remember becoming patient can be a POWERFULL edge on the market. Most of the people are not. Thanks for reading and feel free to share your view in the comments!
WHAT IS AN ETF? (Exchange-Traded Fund)📚
✅An ETF is an exchange-traded investment fund. The fund's management company draws up a strategy and acquires assets in its portfolio, and then issues shares - small shares of this portfolio. When selling an ETF, the investor pays tax in the same way as if it were ordinary shares.
✅If 40 years ago only 6% of American families invested money in investment funds, now they are about 46%. At the end of the third quarter of 2020, $29.5 trillion was invested in open-ended investment funds in the United States — this is almost half of all assets managed by funds around the world.
⚠️What instruments are included in the ETF
🟢The fund's portfolio may consist of any instruments traded on the stock exchange. For example, stocks, bonds, currency, precious metals. Their ratio depends on the fund's strategy. Once in a certain period, the management company reviews the portfolio and rebalances, that is, sells some assets and buys others.
🟢All actions are subject to strict rules, from which managers cannot deviate. All information about the composition of the ETF and the frequency of portfolio rebalancing is available in the fund's documentation.
🟢ETFs can consist of securities, precious metals, derivatives - there are practically no restrictions. Therefore, today there are thousands of funds with very different structures. For example, there is the Global X Millennials ETF— which is a fund for shares of brands beloved by millennials. Or Direxion Work From Home ETF - it invests in services that benefit from the widespread transition to remote work.
❗️What are ETFs
🔴When a fund copies a stock index, it applies replication, that is, it exactly repeats the composition of the index. There are two types of replication — physical and synthetic. If an ETF uses physical replication, it buys the index assets themselves - stocks, bonds, and everything else.
🔴If a fund uses synthetic replication, it does not buy the index assets themselves. Instead, the fund uses an index derivative — an agreement between the parties that the transaction will be executed. A change in the value of the index entails a change in the value of the derivative. On the one hand, this is beneficial for the investor, but on the other hand, a complete repetition of the index may be inaccurate. In addition, there is a risk that the derivative provider will not fulfill its obligations.
🔴In index ETFs, the investor should pay attention to the error of following or tracking error. Let's say the IMOEX index has gained 12% over the year, and the ETF for this index has only 11%. The management costs in this fund are 0.5%, which means that the remaining 0.5% is a follow-up error. This indicator should not be too large, because, in the end, it affects the profitability of the fund. If the fund deviates greatly from the index, the managers do not do their job well.
‼️How the price of an ETF is formed
🔴Shares in ETFs are called shares, they have a market and settlement price - iNAV.
🔴The estimated price is the value of all assets included in one share of the ETF. It can be viewed on the fund's website and the stock exchange.
🔴The market price depends on the supply and demand in the market and differs from the estimated price. It is not profitable for the Fund that the difference between them is too large, otherwise, investors will not buy shares. The market maker makes sure that the price on the stock exchange does not fluctuate much. He puts out large bids in a certain range. The current market price of the fund's shares can be viewed on the stock exchange or in the terminal.
🔴ETFs are a convenient and simple solution for investors who want to get "all in one". For example, they do not want to make a portfolio with their own hands or buy index assets separately. This tool is easy to buy and sell at any time. We can say that an ETF is trust management without red tape with documents and time limits.
❤️ Please, support our work with like & comment! ❤️
Gold (XAUUSD) - Supply & Demand SystemIn this video I show you a very simple, but powerful way to trade Supply & Demand on H4 XAUUSD Charts. You will learn how to identify Supply & demand direction. So you know if you should take Supply, or Demand levels. You also learn some basic rules around AV Reversal , Break of Market Structure (BOS/BMS) , Supply and Demand , Order Blocks
Does Gold Perform Better Than Other Assets in Times of InflationGold Price Against Inflation
When the economy is experiencing inflation, investors often turn to gold to help protect their assets. This is because gold does not suffer from the same devaluation as paper money in times of inflation. But does it always perform better than other assets? We analyzed data to see if that was the case and found that it depends on what type of investment you’re looking at. For example, stocks generally do well in periods of inflation, while bonds perform poorly in these same cases.
What is inflation?
Inflation is defined as an increase in the overall price of goods and services. To better understand what this means, consider a loaf of bread. If it costs $2 to buy a loaf of bread today, but tomorrow that same loaf costs $2.50, there has been inflation because the price went up.
What are the different types of investments?
Investments are opportunities to save money and grow wealth. But what exactly is an investment? A traditional investment is a transaction between an investor and a company or individual. The investor provides capital in exchange for shares in the company’s stock, bonds, property, commodity futures, forex trading aand more.
When deciding what type of investment you should make, there are many options (gold is just one). In addition, there are several types of assets, such as stocks or bonds. Each of these investments has its unique characteristics and risk levels.
Does gold perform better than other assets in periods of inflation?
Stock Vs Gold
As you can see, not all investments are created equal. The performance of investments in periods of inflation will depend on the type of investment.
For example, stocks and cryptocurrencies are likely to perform better in times of inflation, while bonds are likely to achieve worse in recent years.
If you’re investing long-term, gold and stock can be your best option because their price is subject to fluctuations that can predict most of the time. However, if you’re looking for a short-term safety net, gold and cryptocurrencies might provide some stability that other investments lack.
Regardless of what type of investment you choose, it’s essential to have an overall plan for managing your portfolio to align with your goals and risk tolerance.
Does Gold Always Perform Better Than Other Assets?
It depends. The answer to this question is complicated because it depends on the type of investment you’re looking at. In this post, we’ll explore the pros and cons of investing in gold during periods of inflation.
Gold has long been considered a safe haven asset for investors worried about inflation. This is because it doesn’t suffer from devaluation like paper money does in periods of inflation. However, studies have found that stocks and cryptocurrencies do better in high inflation like gold.
One study found that “gold’s performance worsens when inflation rises above 10%.” And another study found that “gold does not protect against loss as well as stocks or bonds.” So while gold can be a good investment during moderate inflation, it may not always perform better than other assets during periods of too-high inflation.
What Is the Best Investment When Inflation is High?
Inflation can have a significant impact on investment performance. In this piece, we’ll discuss the different types of investments and how they perform in periods of inflation.
There are five main types of investments: stocks, bonds, gold, cryptocurrencies, and cash equivalents. Each has a different risk level and potential for return.
While there’s no guarantee that any investment will perform well during a period of inflation, stocks, in general, have been doing better in times of high inflation in recent years.
This is because historically, they tend to rise in value faster than other investments in this situation. Bonds also increase in value during periods of high inflation, but their downside is much higher because they drop quicker when the economy is struggling with recession.
Gold and cryptocurrencies have been rising during recent years. It’s because of higher inflation and global concerns about coronavirus and global trade deficits.
But gold is more stable than cryptocurrencies. So you can easily predict the gold price, whether it is a bit hard to predict the cryptos.
Cash equivalents typically stay at their same levels or fall when the economy enters a recession under periods of high inflation. This is because cash equivalents are less volatile than bonds and stocks due to their equivalence with money which never loses its value.
What is the difference between stocks and bonds?
If you’re thinking about investing in gold or other commodities to help protect your assets, you need to know where to put your money. Certain types of investments perform better than others, depending on the economic climate.
For example, stocks generally do well when inflation is on the rise. That’s because investors are earning more for their money as prices rise. That means stocks often beat bonds in periods of inflation.
Like during the Great Recession, stocks also tend to outperform bonds regarding high unemployment rates. On the other hand, Bonds don’t fare as well during periods of inflation and tend to perform better in cases of low unemployment.
As far as gold investment goes, it does not always beat other investments like stocks and bonds. Gold performs worse than these investments during periods with low unemployment but performs better than them during periods of high unemployment—like during the Great Recession.
So, while you are an investor, you must consider the global situations and growth. If you see covid pandemic is increasing unemployment rates, then it is better to invest in gold. On the other hand, if you see only inflation rising but not employment, I suggest you invest in stock and gold together.
Gold vs. Stocks, Gold vs. Bonds
Gold is often seen as a way to hedge against inflation. In high inflation, the value of gold and other hard assets will be higher than paper money and other investments.
But do stocks and bonds perform similarly?
We researched data on stocks and bonds to explore this, comparing them to gold. We found no general rule for performance: While some types of investments do well in periods of inflation, others do not. It largely depends on what kind of investment you’re considering.
For example, stocks tend to perform better than bonds when there is inflation because they are less sensitive to changes in interest rates or monetary policy. Conversely, bonds are more susceptible to these factors, so they typically perform worse during times of inflation.
But gold always does better in most cases. But when the inflation goes over 10% in those cases, gold can’t perform well like stocks. But we should be concerned about the stock market because most of the stocks have been running higher in recent years. Every company has its profit limitations and people demands. So anytime the stock market can collapse.
The Better Inflation Hedge: Gold or Treasuries?
Many investors look to gold to hedge against inflation, mainly because it doesn’t experience the same devaluation as paper currency. But does it consistently outperform other assets?
The answer is no. It depends on what type of investment you’re looking at.
For example, stocks generally do well in periods of inflation, while bonds perform poorly in these same cases. This is because bonds are primarily invested in fixed-income investment vehicles, which have historically done very poorly during periods of inflation.
Treasuries are also not the best performance during periods of inflation; they tend to outperform stocks only when the rate of inflation stays below 5 percent for an extended period. Otherwise, their value will be eroded by inflation and the higher interest rates that accompany it.
But don’t worry! Gold’s performance can vary depending on many factors like the period (long versus short), the country (G7 versus developing economies), and whether or not there’s a global recession. So let take a closer look at how gold may work as an asset during times of inflation:
Real interest rates drop in the inflationary environment, and gold and stock price go up. This is because central banks try to quickly for loans and reinvest in the economy.
Can Bitcoin Also Provide Hedge Against Inflation?
Bitcoin, the cryptocurrency that many people are now investing in, is often touted as a hedge against inflation. But does it always perform better than other assets?
To find out, we analyzed data on four different types of investments: stocks, bonds, gold, and bitcoin. As you can see, each asset performs differently during periods of inflation.
As you would expect, stocks do well in periods of inflation, while bonds perform poorly in these same cases. However, stocks typically outperform bonds because they’re less sensitive to changing interest rates.
But what about gold and bitcoin? We found that gold fares better than stocks during periods of inflation (although not as well as bonds).
Bitcoin performance depends on how people use it; if they use it solely as an investment, it performs well during deflation or inflation periods. On the other hand, if people are using it for transactions, then it performs poorly during periods of both types of economic instability.
Conclusion
Each asset has its unique characteristics. Therefore, investing depends on the environment, situation, global economic condition, inflation, and supply-demand.
Such bond markets are not usually happening big moves. The gold market is again very stable; on the other hand, the stock market and cryptocurrencies doing quite well over the years.
The crypto market is so volatile, many traders invest intraday in the hope of making a profit in a short time, and some investors stay away from investing in cryptos.
Overall, the gold and stock markets are the best assets for investments when inflation rises. However, it has a definite boundary line, which should never be exceeded.
GOLD - Facts to have a true sense of gold trading 🔥What is gold forex trading?
Gold forex trading is the term used to talk about the ways you can gain exposure to gold via FX markets. Instead of buying and selling the precious metal, or speculating on its price using futures, you can trade it as a dollar-denominated currency pair or via gold-linked pairs.
As historically gold was used as a currency, it’s not surprising that it’s still an internationally recognised part of the forex market. It trades under the currency code XAU.
Trading gold in the forex market can be a great way for currency traders to get exposure to the commodity and diversify their portfolio. Its stability when compared to other assets during global crises means it’s a popular hedge against inflation. Often, the commodity gets a lot of attention around large market-moving events when investors get spooked and rush into the metal as a safe haven.
For example, amid the Covid-19 pandemic, governments and traders started moving money into gold to protect against losses due to inflation.
Can you trade gold on forex markets?
Yes, you can trade gold on forex markets using the XAU/USD currency pair. This is the spot price of gold, which tells you how much 1 troy ounce of gold costs in US dollars. Alternatively, you can get exposure to gold prices by trading other currency pairs that have a correlation with the precious metal – these include the US dollar, Australian dollar, South African Rand and Swiss Franc.
Gold and the US Dollar
Traditionally, the relationship between gold and the US dollar has been an inverse correlation. As investor optimism has increased, money has flowed out of gold and into currencies, while periods of economic concern have created inflows into gold away from higher-risk assets (like FX).
However, it’s important to note that the USD isn’t the only factor involved in gold’s pricing. This means that sometimes the correlation between gold and USD isn’t so straightforward and doesn’t always move 1 for 1. Especially as there have been instances of the US Dollar being considered a safe haven, due to its use as a global reserve currency, which has seen the asset classes move in tandem.
Gold and the Australian Dollar
Gold and the Australian Dollar have an extremely tight relationship due to Australia’s position as the third biggest gold producer in the world. It contributed about $5 billion worth of gold each year.
As such, gold has a positive correlation with AUD/USD. When gold goes up, AUD/USD tends to go up. When gold goes down, AUD/USD tends to go down. In fact, studies found that a 1% increase in the nominal gold price led to a 0.5% appreciation of the AUD/USD nominal exchange rate.
Gold and the South African Rand
The South African Rand is often correlated with Gold as South Africa is a large exporter of gold. So, when the gold price goes up, it’s thought that the price of ZAR will rise too. This was particularly true when the Rand first entered circulation, but the correlation is still present as the precious metal represents about 15% of the country’s total exports.
You could trade this correlation through the USD/ZAR pair, which would in theory have an inverse relationship to the gold price.
Gold and the Swiss Franc
The Swiss franc has traditionally moved in line with gold, given that more than 25% of Switzerland's money is backed by gold reserves. The Swiss Frac is a fairly common proxy for gold. We saw this relationship in full force in early 2020 following geopolitical tensions between the US and Middle East – gold rallied to around $1560 per troy ounce and the franc followed to trade at intraday highs of $1.03.
So, in order to trade gold, you’d be looking at the negative correlation it has with the USD/CHF pair: when gold price goes up, USD/CHF goes down and vice versa.
Gold forex risk factors
There are a few factors you need to consider before you trade gold on forex markets:
Liquidity – the ease to which you can enter positions can fluctuate throughout the day. However, the average daily trading volumes of gold pairs tend to exceed all currency pairs, excluding EUR/USD, GBP/USD, and USD/JPY
Supply and demand – like any market, when demand is up and supply is down, price rises, and if supply increases and demand drops, prices will fall. Half of the global demand for gold is driven by jewellery production, while another 40% comes from investors
Market volatility – as we’ve mentioned, the volatility behind gold’s price is driven by its use as a safe haven. When other higher-risk assets aren’t performing, people move to gold. In contrast, when risk-on assets are strong, gold trading levels fall
How to trade gold in forex
To trade gold in forex, you need to go through a few quick steps:
Open a City Index account or log in to an existing account
Search for a currency pair in our platform
Decide whether to go long or short on the price
Enter your positions, attaching stops and limits as necessary
Monitor and close your trade
Not ready to trade live forex markets? Practise trading gold-linked currencies in a risk-free environment with a demo account.
Can you day trade gold in forex?
It is possible to day trade gold in forex, but it’ll depend on the market conditions at the time because gold is a relatively stable asset most of the time – until there’s a period of economic uncertainty and more volatility.
As XAU/USD tends to trade in a range , reaching previous highs or lows over time, strategies that take advantage of these moves tend to be more popular. By identifying these buy and sell points you can, for example, open a position on gold when it’s trending up and target a known level of resistance as your sell price. Compared to day trading, this is a relatively low-risk strategy and not designed for quick profit but benefits from the more reliable XAU/USD price movement.
Gold forex trading times
Gold forex is a 24 hour market, but peak trading volume is usually found in New York trading hours, which are between 1pm to 10pm (UTC).
Trading gold markets during peak activity will offer higher liquidity and lower volatility, making them good targets for safe-haven positions. Alternatively, trading gold in lower volume hours can mean less liquidity but provides the extra volatility needed to execute shorter-term strategies.
hope best of luck to you guys
PDL vs PDH Educational 💰📉 I tried to explain in this example how i use PDH/PDL to spot intra-day reversals, this happens on all the financial instruments from forex to crypto. Take a look and study this concept.
What do you think ? Have you traded it ?
HOW-TO: Cosmic Cloud #1📡 INDICATOR
Cosmic Cloud
👩🏫 HOW-TO CONTENT
This how-to shows that even price movement during major events like global market crashes adhere to the indicator levels.
✅ POINTS
the price drop starts after reaching a resistance level (top-left chart) or
the price drop is confirmed by a downward breakout from one of the support levels
the 2020 stock market crash (👑) reaches its lows at various Cosmic Cloud supporting levels
🔔 USEFUL ALERTS
Resistance Channel Re-entry ↓
Basis Test ↓↑
Support Channel Entry ↓
HOW-TO: Cosmic Channel #1📡 INDICATOR
Cosmic Channel
👩🏫 HOW-TO CONTENT
This how-to covers the price breaking through all the support or resistance channels. This is a likely signal that the price is about to begin a volatile move in that direction.
✅ POINTS
price breaking through all resistance channels (☝️) signals that a volatile bullish trend is about to begin
price breaking through all support channels (👇) signals that a volatile bearish trend is about to begin
🔔 USEFUL ALERTS
Resistance Channel Break ↑
Support Channel Break ↓
