GOLD - HAS NOT LOST IT'S GLITTER YET - (UPDATED)
This chart originally published about a year ago anticipating a low being formed around 1150 zone did not get follow though and the price action developed a lager falling wedge resulting in eventual low which now seems to be established in 1050 area.
Due to this protracted agonising ending diagonal chop, it has whipped up bearish frenzy leading to make wild claims like Gold to sub 1000 even figures like 800 or lower being published. One of the reason for this extended sideways chop in my view was entirely due to similar chop in DXY Index. It is notably that in recent Dollar strength gold did not drop much as it progressed towards completing a falling wedge or "Ending Diagonal"
My original view regarding the upside potential has not change overall, namely that of a possible retest of 2011 high or new higher high being achieved. Although it is possible the low we have seem is not final low of what I think is wave 4 low but larger Wave A low. If this is the case, then we might see retracement towards 1500 before reverting back to down cycle.
However, I am of the opinion that we have wave 4 low and are now headed in impulsive wave move towards 2000 zone, because Dollar Index (DXY) also seems to have topped (please see supporting charts below of DXY, USDZAR, USDSGD). Additionally there are other intermarket analysis suggesting significant top for Dollar is now in place with few years of dollar weakness ahead of us.
If this is correct then there is no reason why Gold will fail in its progress in wave 5.
Technical summary:
1. 50% retrace of the move from 2000 low to 2011 high and in the proximity of what was resistance high in 2008 is now potential support in addition to trendline support of line drawn from 1980 high to 2008 high .
2. Support from other Fib confluence shown on the chart.
3. MACD lifting off from having formed flat based along with RSI about to confirm breakout from coiling.
4. Price has now broken out above declining trendline of the falling wedge (Ending Diagonal).
5. The price progression of the low is very impulsive and is developing a supper nesting ie 1,2,i.ii,iii etc.
6. If Dollar has topped as shown in supporting charts below, then it will be supportive for Gold bullish cycle,
7. Seasonally low is formed in Jan for initial lift off which will be partially retraced into April from which intermediate 3 of major wave 5 could develop.
8. Prevailing excessive bearish sentiments calling for drop to 800 or lower.
Conclusion: Even if the low described above is Wave A low we should see rally to 1500 area worth getting involved.
a) If you wish to position trade this with reduced risk and still benefit from leverage then consider far out of the money long term Call Options of Call Options Spread on ETF for Gold GLD. My preferred method.
b) Alternatively geared play on Gold strength could be capitalised using Gold Mining Stocks or Options on them but these carry additional risk.
Warning: This is my interpretation of price action using TA approach that I consider helps me most5 but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from.
Thank you for taking the time to read my analysis.
DanV
danv-charting.com
Due to this protracted agonising ending diagonal chop, it has whipped up bearish frenzy leading to make wild claims like Gold to sub 1000 even figures like 800 or lower being published. One of the reason for this extended sideways chop in my view was entirely due to similar chop in DXY Index. It is notably that in recent Dollar strength gold did not drop much as it progressed towards completing a falling wedge or "Ending Diagonal"
My original view regarding the upside potential has not change overall, namely that of a possible retest of 2011 high or new higher high being achieved. Although it is possible the low we have seem is not final low of what I think is wave 4 low but larger Wave A low. If this is the case, then we might see retracement towards 1500 before reverting back to down cycle.
However, I am of the opinion that we have wave 4 low and are now headed in impulsive wave move towards 2000 zone, because Dollar Index (DXY) also seems to have topped (please see supporting charts below of DXY, USDZAR, USDSGD). Additionally there are other intermarket analysis suggesting significant top for Dollar is now in place with few years of dollar weakness ahead of us.
If this is correct then there is no reason why Gold will fail in its progress in wave 5.
Technical summary:
1. 50% retrace of the move from 2000 low to 2011 high and in the proximity of what was resistance high in 2008 is now potential support in addition to trendline support of line drawn from 1980 high to 2008 high .
2. Support from other Fib confluence shown on the chart.
3. MACD lifting off from having formed flat based along with RSI about to confirm breakout from coiling.
4. Price has now broken out above declining trendline of the falling wedge (Ending Diagonal).
5. The price progression of the low is very impulsive and is developing a supper nesting ie 1,2,i.ii,iii etc.
6. If Dollar has topped as shown in supporting charts below, then it will be supportive for Gold bullish cycle,
7. Seasonally low is formed in Jan for initial lift off which will be partially retraced into April from which intermediate 3 of major wave 5 could develop.
8. Prevailing excessive bearish sentiments calling for drop to 800 or lower.
Conclusion: Even if the low described above is Wave A low we should see rally to 1500 area worth getting involved.
a) If you wish to position trade this with reduced risk and still benefit from leverage then consider far out of the money long term Call Options of Call Options Spread on ETF for Gold GLD. My preferred method.
b) Alternatively geared play on Gold strength could be capitalised using Gold Mining Stocks or Options on them but these carry additional risk.
Warning: This is my interpretation of price action using TA approach that I consider helps me most5 but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views.
For those who appreciates my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then please be constructive and share for all to learn from.
Thank you for taking the time to read my analysis.
DanV
danv-charting.com
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