Gold near term outlook:
The market has indeed finally broken below that long discussed July low at $1077, reaching $1074 yesterday. No doubt the market is oversold after the tumble from the Oct 15th high at $1191, is seen within the final downleg in the decline from that high (wave 5, see numbering on daily chart below) and also likely part of that long discussed, major bottoming (see long term below). Though these all suggest that a bottom (potentially major bottom) is nearing, there is still no confirmation of even a shorter term low "pattern-wise" (5 waves up on short term chart below) and along with bearish technicals (see sell mode on the daily macd) suggests a further period of basing (and even further, but likely limited lows) ahead. Further support below $1074 is seen at the falling trendline from June 2013 (currently at $1058/63 and within the area of the base of that multi-year falling wedge, see longer term below). Nearby resistance is seen at the multi-day bearish (currently at $1092/95) and $1119/22 (both the broken base of the bullish channel from July and a 38% retracement from the Oct high). Bottom line : though a bottom (and potentially major bottom) is seen nearing, there is still no confirmation of even a shorter term low so far.
Strategy/position:
With the market seen nearing a bottoming, looking to trade from the long side. But with scope for more basing and even further (but likely limited lows), not seen as the time to just buy here. So instead for now, would buy on a close $3 above that multi-day bearish trendline (would increase the likelihood of at least a near term bottom) and in that case initially stopping on a close $3 back below.
Long term outlook:
No change in the long held view of a huge falling wedge that has been forming over the last few years, generally viewed as a bottoming/reversal pattern, and with an eventual upside resolution of the ceiling (currently at $1265/75). But as been discussing over the last few months, a more extended period of ranging/basing was likely as the downside pattern from June was not "complete". This has indeed, finally occurred (wave v) . But at this point, there still no confirmation that the final low is in place (not even a shorter term low, see above) and along with the long discussed view of downside pressure/ washout across commodities and commodity currencies into mid/late Dec (see recent emails on oil and a$ for example), suggests a further period of this broad ranging/basing in gold ahead (see in red on weekly chart/2nd chart below). A final note, there is always the risk of the downside resolution of this multi-year falling wedge. Though not currently favored, a clear break/close below the base of the pattern (currently in the $1150/65 area) would be a bigger picture bearish sign. Bottom line : long held view of a major bottoming as the market forms that huge falling wedge over the last few years still playing out, but with scope for a continued period of this ranging/basing as part of the process ahead.
Strategy/position:
With the market seen in process of a potentially major bottoming, looking to switch the longer term bias to the bullish side. So for now, would use the same entry/exit as the shorter term above (more major bottoms generally begin with smaller ones).
The market has indeed finally broken below that long discussed July low at $1077, reaching $1074 yesterday. No doubt the market is oversold after the tumble from the Oct 15th high at $1191, is seen within the final downleg in the decline from that high (wave 5, see numbering on daily chart below) and also likely part of that long discussed, major bottoming (see long term below). Though these all suggest that a bottom (potentially major bottom) is nearing, there is still no confirmation of even a shorter term low "pattern-wise" (5 waves up on short term chart below) and along with bearish technicals (see sell mode on the daily macd) suggests a further period of basing (and even further, but likely limited lows) ahead. Further support below $1074 is seen at the falling trendline from June 2013 (currently at $1058/63 and within the area of the base of that multi-year falling wedge, see longer term below). Nearby resistance is seen at the multi-day bearish (currently at $1092/95) and $1119/22 (both the broken base of the bullish channel from July and a 38% retracement from the Oct high). Bottom line : though a bottom (and potentially major bottom) is seen nearing, there is still no confirmation of even a shorter term low so far.
Strategy/position:
With the market seen nearing a bottoming, looking to trade from the long side. But with scope for more basing and even further (but likely limited lows), not seen as the time to just buy here. So instead for now, would buy on a close $3 above that multi-day bearish trendline (would increase the likelihood of at least a near term bottom) and in that case initially stopping on a close $3 back below.
Long term outlook:
No change in the long held view of a huge falling wedge that has been forming over the last few years, generally viewed as a bottoming/reversal pattern, and with an eventual upside resolution of the ceiling (currently at $1265/75). But as been discussing over the last few months, a more extended period of ranging/basing was likely as the downside pattern from June was not "complete". This has indeed, finally occurred (wave v) . But at this point, there still no confirmation that the final low is in place (not even a shorter term low, see above) and along with the long discussed view of downside pressure/ washout across commodities and commodity currencies into mid/late Dec (see recent emails on oil and a$ for example), suggests a further period of this broad ranging/basing in gold ahead (see in red on weekly chart/2nd chart below). A final note, there is always the risk of the downside resolution of this multi-year falling wedge. Though not currently favored, a clear break/close below the base of the pattern (currently in the $1150/65 area) would be a bigger picture bearish sign. Bottom line : long held view of a major bottoming as the market forms that huge falling wedge over the last few years still playing out, but with scope for a continued period of this ranging/basing as part of the process ahead.
Strategy/position:
With the market seen in process of a potentially major bottoming, looking to switch the longer term bias to the bullish side. So for now, would use the same entry/exit as the shorter term above (more major bottoms generally begin with smaller ones).
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