XULF Report – 28/06

Fall continues

XULF Report

The fall continues but there could be a bottom in sight now some gold miners are cutting back on production as it becomes less economically viable to continue output under $1200. Rising real interest rates attributed to speculators betting on the Federal Reserve raising rates during 2014 has contributed to gold being shunned to the sideline. Some Fed officials commented that the speculators actions doesn’t align with Ben Bernanke’s assessment of the economy last week and his language in regards to the Fed’s next move being data dependent and flexible. However this speculation has helped the bears force gold down.

This weekly chart shows gold’s bull run since October 2008 and since hitting a peak of $1921 in September 2011 gold has been on a general retracement. An important potential support level is $1159 which is the 61.8% fib retracement level which is incidentally a previous support. Price did drop as low as $1179 and is currently hovering around $1200 any traders looking to buy should consider placing stop losses under $1159 as long, medium and short term traders will all be keeping an eye on interaction with this level.

The 4 hour chart is hinting of a reversal now it’s printed a strong bullish hammer that looks to be perfect as the shadow is multiple times longer than the body and it is equal size to the bearish marubozu two candlesticks prior. More confirmation can be gleaned from the Stochastic which has generated a buy signal but bear in mind the RSI is still below 30. Therefore there is a probability a small bounce could occur however there is resistance forming at $1207 and bulls will be nervous by the fact price hasn’t yet bounced off the $1159 Fib level yet so trade cautiously and don’t be greedy if going long. A break up through this morning’s resistance at 1207 should trigger buying demand but bulls will find more resistance around $1213 where price could intersect with the current medium term bearish trend.

XULF Report – 27/06

Gold decline continued

XULF Report

The gold decline continued through yesterday but seems to have found a bottom at $1221 and is currently trading in the $1230’s. The shocking final measure of US GDP for the 1st quarter which was revised down to 1.8% from 2.4% which is bad news for the economy but good news for stocks as the Dow Jones had a triple digit rally. Gold hasn’t reacted as well but has managed to climb a few dollars however the outlook still looks bearish.

The 1 hour chart shows the latest candlestick has printed a engulfing bearish whilst simultaneously making a lower high whilst at the same turning around resistance. Three factors signalling bearish on one chart means we are likely to see gold move lower from here and maybe test support towards the lower $1220’s. Place stop above previous candlesticks high around $1245 and target support in the lower $1220’s which offer a good risk to reward ratio. If price begins to make new highs it is probable the reversal will take place.

The daily chart’s RSI is still converging with price action by showing lower lows which signals price isn’t ready to reverse just yet.

Economic influences traders need to be mindful of today are the Italian 10 year Bond Auction which unfortunately has no specific schedule but is likely to be around 10am GMT, the UK’s Current Account at 9:30 GMT and US Weekly Jobless Claims and Pending Home Sales 13:30 and 3pm GMT respectively.

Market Analysis Thursday 27th of June

Gold yesterday touched the lowest level

Strengthening Thin End Successfully Kospi Index Bearish Trend

South Korean shares for trading on Wednesday ended an increase. As well as trading in South Korean stock markets caused by the increase in the volume of stock purchases due to the conducive trade in Asian stock markets after the rise in U.S. stocks overnight. Aggressive investors are back in the hunt for shares of exporters.

Technically, the index in the trading session today, Thursday (27/06) is likely to strengthen, test positive trend. On the bullish hammer formation M30 chart gives an opportunity for the index to move upside. However, the volume is likely to increase, as well as an early indication of bullish index. In addition, RSI, on the M30 chart, is in the oversold area, cue upside.

Expected, the index tested the first resistance level of 250.36 and 254.05. If it fails at 245.55, then the next index is expected to tend to retest the 241.90 support level and continue up the possibility of being in the 238.37 area.

Euro Burdened By Draghi Policy Attitudes

The euro slumped to a 3-week lows versus the U.S. dollar after European Central Bank President Mario Draghi highlighted the risk of slowing growth in the Euro zone and ensure monetary policy will remain accommodative.

Technically, the trading session today, Thursday (27/06), the pair euro dollar likely to move in a negative trend.

The weakening Euro is mainly expected to immediately reexamine the minimum support at 1.2837 and 1.2699 maximum. Meanwhile, if the euro is able to break and hold above 1.3025, then another alternative scenario the chance to test Euro Resistance at 1.3147 and 1.3262 area.

Worst Performance Gold In 1st Quarter

Gold yesterday touched the lowest level of the last was three years ago, and to the worst record in the quarter decreased, due to the strong dollar, the potential improvement in U.S. economic data, strengthening of global stock markets, and lack of physical demand for gold. In the second quarter, gold has dropped about 23%, the worst performance of gold in a single quarter since 1968 according to Reuters. Goldman Sachs and HSBC also cut its outlook for the gold price this year-end and year-end 2014.

Technically, gold at today’s trading session on Thursday (27/06) potentially bearish, test returned negative trend, but prone to reversal. RSI indicator tends to re-test support channel and towards the oversold area, but Bollinger Band which began to widen, thus giving impetus to gold to the upside.

Estimated gold price immediately prior to test support at least in the area of ​​1205.88 and re-test the maximum level of 1182.18. However, if the price of gold is able to break and hold above 1238.55 then estimated the price of gold could potentially test the Resistance 1261.93 and 1285.27.

25/06 – XULF Report

Deliberating bulls created a new range for gold

General profit taking and cautiousness from deliberating bulls created a new range for gold of $1276 to $1390 for the most part of yesterday. Gold did show signs of beginning another downward leg approaching Friday’s low of $1269.51 but the bears kept encountering demand in the $1275 to $80 region. In the equity world a broad scale risk-off sentiment emerged after reports that China’s tightening credit conditions are beginning to take the toll on developers and manufacturers as money market rates are currently double the average for the year. This combined with the realisation the Fed is ready to begin tapering if the US economy continues to improve is bringing the widely anticipated correction for stocks.

My weekly analysis yesterday predicted a small bounce for gold after Friday printed a harami and the RSI returned from oversold however this play seems to be losing its appeal as it fails to hold ground in the $1290’s. Due to the lower highs visible on the 1 hour chart since Friday’s rally to $1302 the short term outlook is now more bearish. Bears should consider shorting if price spikes to the resistance area displayed by the green rectangle or when price moves below the support area of $1269.50 to $1275.

Now it has dawned on investors that the Fed is poised to act this week’s economic numbers will be as important as ever as the market awaits evidence to put the Fed’s exit plan into action. Tonight we have the US Durable Goods Orders, New Home Sales and Consumer Confidence which could force gold lower out of this interim range.

Gold has taken a hammering in the last 36 hours – 21/06 XULF Report

XULF Report

Gold has taken a hammering in the last 36 hours as Federal Reserve Chief Ben Bernanke implied that if the current trend of economic progress continues the exit of stimulus will begin. Although the language used was very similar to previous statements highlighting that any slowdown is data dependent and that the Fed are not comfortable enough at present to give specific timelines which makes the battering of gold seem a little overdone. Maybe that’s why gold has surged $20 to around $1290 this morning after making a low of $1269.50.

Technically the daily chart looks oversold according to the RSI, Stochastics and the Bollinger Bands any potential bulls need to wait 24 hours after such a decline to make sure the market has stabilized on lower volatility. If today prints a mildly bullish reversal candlestick look for long opportunities on Monday and by then the aforementioned indicators will have triggered the buy signals. Be aware that this strategy is risky because it entails going against the trend and the overall bearish trend could resume itself at anytime. Therefore take profits when a bearish candlestick prints or target the 38.2% Fib retracement level at $1314. The main event today is Bank of Japan’s Governor Kuroda who is talking at a press conference at 7:45 GMT and his aim will be to reinstall confidence into the Japanese stock market by reinforcing the intent on weakening the yen and achieving 2% inflation therefore USD/JPY could have a surge and be back on track to its long term bullish trend dating back to November and this will give more power to the bears. Taking into account the fragility of gold, the oversold levels and Kuroda speaking today make sure you trade extra careful with both long and shorts because there could be sizeable moves.

Bearish trendline signalling downward motion is building again – XULF Report 20/06

XULF Report

After the dust has settled fundamentally speaking both equities and gold are in the same scenario as before Bernanke’s comments at the FOMC press conference as the central bank chief refrained from giving any specific schedule for slowing down bond purchases. Instead he alluded to the fact that a wind down will be data dependant. However his upbeat tone on the economy and mentioning that downside risks were diminishing means it is likely the tapering will begin later this year with the September policy meeting being a major focus. Gold dropped sharply from around $1374 to a low of $1339 in the early hours where buy orders accumulated around previous support of $1338 established in May. The sell-off was attributed to panic rather than substance as investors didn’t want to get caught out by a surprise statement by the Fed and Bernanke.

The momentum indicator has finally bounced off its bearish trendline signalling downward motion is building again and if price can test $1338 support again within the next 24 hours it is likely to give way to the bears. The important thing to consider when price retests support levels is whether price has been making lower highs because this manifest that the bears are happy to short the market at decreasingly lower prices. The lower highs actually form a descending triangle which is a powerful and rather reliable pattern. Zoom into shorter timeframes as price draws closer to support and look for lower highs. Price may bounce once or twice around $1338 but the chances of a breakthrough increase with lower highs and shorter intervals between support tests.

There is still a busy schedule ahead today with manufacturing PMI’s from Europe and US and Weekly Jobless Claims and Existing Home Sales to name a few so make sure you have your economic calendar ready to view.

Jalatama Loco London (XULF) Report 14/06/2013

Gold continues to show resilience taking into account the positive Non-Farms last Friday and now better than expected US Retail Sales and Jobless Claims. Yes there has been some selling off the back of these numbers but there is also clearly steady demand preventing the bears from dominating the market. As I mentioned yesterday there a various opposing forces impacting gold at present including the forthcoming withdrawal of stimulus and global growth concerns which is bearish whilst at the same time the uncertainty surrounding global growth is supporting gold at these levels.

Technically gold is the same as yesterday, and that is range bound with any trends ending rather quickly. Therefore traders who cannot wait until we have a breakout out of the triangle pattern shown on the daily chart yesterday can look for intra-day opportunities buying at support and selling at resistance levels. The 15 minute chart shows recent support and resistance levels that may provide a bounce opportunity to profit. Look to sell around the yellow resistance and buy around green support. It is paramount to assess whether there is any change in fundamentals or news headlines that is driving or dropping price before executing and try to incorporate bearish candlesticks to confirm the reversal.

This may mean you miss out on a couple dollars of extra profit but the confirmation is worthwhile forfeiting the extra profit. It is recommended not to use this strategy during economic releases so be aware of the US Producer Price Index at 13:30 GMT and Consumer Sentiment 14:55 GMT

Jalatama Loco London (XULF) Report 12/06/2013

XULF Report
Gold got wrapped up in the broad scale sell-off yesterday triggered by the Bank of Japan unveiling no additional stimulus measures and concerns about the legality of the ECB’s OMT programme. The precious metal has been well known as a good hedge against inflation and currency devaluations hence a withdrawal of money supply tends to cause investors to move away and go back to currencies. If the German Court Ruling over the constitutionality of the ECB’s unlimited bond purchases pledge is concluded as illegal then this could unravel all of Mario Draghi’s resolute hard work to lower bond yields of highly indebted nations.

The ECB hasn’t needed to activate the bond buying of its Outright Monetary Transactions programme but the pledge to make unlimited purchases has instilled confidence in the Euro which could be eradicated if the pledge isn’t supported by law. This will weaken EUR/USD and put heavy pressure on gold. Conversely a success for the ECB should give investors more appetite for gold. The poor Chinese trade data at the weekend is also dampening the mood for gold after further evidence points to slowing growth from the metals second largest importer.

The 15 minute chart displays how price has recouped much of yesterday’s losses to find resistance at the bearish trendline that began forming on Monday. Given the general descent since Friday this pullback towards this bearish trend offers a good opportunity to short with a tight stop. Remember that the weekly chart strongly indicates with the two side-by-side shooting stars that the market will finish the week down therefore most factors are bearish in the short term. A break of this trendline may produce an incline of a few dollars but bear in mind we need fundamentals somewhat to deliver gains of any substance. If the ECB wins its court case that may be the impetus gold needs.

Jalatama Loco London (XULF) Report 11/06/2013

XULF Report
Yesterday gold showed signs of the downtrend continuing reaching a low of $1375.70 before bouncing back into the $1380’s range as FOMC Member James Bullard said low inflation will allow the Fed to maintain the bond buying if conditions warranted it. In a press conference today the Bank of Japan announced the level of its stimulus remains unchanged and that they were more upbeat about the economy which caused a little volatility but the market has since calmed.

In the short term the outlook is rather neutral and it looks like there will be many ups and downs around the $1380’s but according to two consecutive shooting stars of the weekly chart it is probable price will finish towards the lower $1370’s by the week end. Most indicators are middle-of-the-road on shorter timeframes but traders looking for opportunities can look for a bounce or break of today’s bearish trendline. Consider shorting if price bounces printing a shooting star and consider a long trade once price has penetrated the trendline and then made a higher low.

Short targets remain the same at $1373 and $1354 which are previous support levels that received an influx of buy orders during May. If price breaks the bearish intra-day trendline be mindful not to be greedy given the recent turn of bearishness.
There could be some headline news disseminating from the first day of the German court ruling regarding the constitutionality of the ECB’s monetary operations therefore keep an eye on your newsfeeds and trade carefully.

Jalatama Loco London (XULF) Report 10/06/2013

XULF Report

Today gold has some trimmed some losses attributed to the US Non-Farms last Friday in a thinly traded market and has been consolidating for the last 6 hours between $1384 and $1388. In the short term the signals are bearish across most timeframes. The bullish trendline on the 4 hour chart has been broken and the 20 MA has just crossed below the 50 MA warning that the bears may get a firmer grasp of this market and the weekly chart is also bearish with two consecutive shooting stars. The 5 minute chart shows price has recently broken today’s upward trend indicating the retracement is rather weak. Therefore a short trade with a tight stop above today’s high around $1388/89 would be the obvious short term play with a low risk entry. Target levels are Friday’s low of $1378.80 and $1373.60 which acted as a strong support level on 28th May. If these levels fail to support gold then target $1354 which is the next support level established 22nd May. The economic calendar starts to get busy tomorrow so today is a good opportunity to apply price behavior tactics but do bear in mind that trading is rather light which can result in sharp and sudden movements that turn out to be misleading.

Jalatama Loco London (XULF) Weekly Report 10 – 14 June 2013

Weekly XULF Report 10 – 14 June 2013

Gold was having a steady performance last week until a better than expected US Non-Farms on Friday gave good reason for investors to ditch safe havens for riskier assets causing gold to erase all of its gains on Thursday to reach a two week low of $1378.80. For much of the week gold was hovering around the $1400 level until ECB President Mario Draghi’s comments triggered a spike to $1421 after he informed the markets that the economy should stabilize and recover during the course of the year and that further monetary stimulus was not at the forefront of policymakers’ minds. Investors bought the Euro and aggressively sold the dollar on the back of these comments. Gold’s gains were eradicated 24 hours later when the US Non-Farm data showed that despite the mixed set of data recently the US economy is creating more jobs raising the probability of stimulus tapering occurring before the latter parts of the year.

The biggest drag on gold at present is the anticipation of the Federal Reserve slowing down the bond purchases which will strengthen the dollar making gold more expensive for investors using other currencies. Contrary to popular opinion gold may hold its ground and be tough for the bears to control for the rest of the year. Gold has already priced in a significant chunk of this expectation by declining nearly 20% this year therefore it would be foolhardy to take further declines for granted when the Fed begins the slowdown. If the Fed cuts back too sharply we could see a strong equity correction and some losses for gold but as investors take a look at the bigger picture they may switch to safe haven assets amid the uncertainty generated by the removal of stimulus on such an unprecedented scale. In the other scenario if the Fed play it in a way that appeases investors this should result in lower volatility for both gold and equities which would regenerate some confidence in gold and be supportive for a good finish by the end of 2013.

Technically gold has been showing signs of a possible bounce back towards the long term bearish trendline over the past three weeks but last Friday’s drop means the weekly chart is now displaying two consecutive shooting stars. The 10, 20, 50 and 100 Moving Averages aligned in descending order illustrates the market is far away from any correction but the higher low on the RSI indicates the pace of the decline is diminishing. Bulls will have been watching for a break of the bearish trendline on the momentum indicator but unfortunately for them Friday’s performance looks as though the momentum indicator is now bouncing off its own trendline ready for another downward leg. So to summarise the outlook for gold it looks like there will be a descent during June but at a slowing rate. Although traders need to be mindful of gold’s resilience of late in face of bearish fundamentals which hints that the market may be ready for a correction towards the long term bearish trendline within the next few weeks.

We have an eventful week with various types of data scheduled including Japan’s monetary statement and press conference Tuesday which is likely to move USD/JPY. On Wednesday and Thursday Germany are concluding a constitutional ruling on the ECB’s monetary operations which will impact gold by moving the EUR/USD, Thursday reveals US Retail Sales for May and on Friday is the University of Michigan’s Consumer Sentiment survey. Trade carefully around these numbers by using stop losses or reducing exposure.

Jalatama Loco London (XULF) Report 28/05/2013

XULF Report

Gold continues to be stuck in the $1382 to $1400 range building the pressure for a substantial breakout whenever that may occur. The bulls have attempted to test $1400 several times now but the wall of resistance seems to be too thick as there are minor resistances from $1397 to $1401 collectively building a very strong defence line for the bears. China’s Premier comments regarding the huge challenges his country faces amid slowing growth is another potential black cloud hanging over the equity rally causing investors to pause for breath and keep most markets range bound. It really feels like gold needs something to push its way out of this range, either to the upside or downside, as it has become clear the bulls need some impetus to push through $1400 whilst they are being too stubborn to step aside and let the bears win. That impetus could emanate from the US Consumer Confidence tonight at 10pm. A disappointing result should spark an equity sell-off and force gold up through $1400. On the contrary a good number is likely to cause the opposite effect and drop gold lower. The improving housing market in the US has increased consumer net wealth and showed signs of increases in consumer confidence and spending therefore the market will be eagerly anticipating more evidence of this.

From a technical perspective the setting is more bullish than bearish but this all depends on an upside breakout through $1400. The daily chart shows how the medium term bearish trend has lost momentum displayed by the lower pain momentum indicator that has broken its own trendline and price has now formed into an ascending triangle. This triangle pattern will have little value unless price breaks the upper side at $1400 but if it does it could yield significant price appreciation over the medium term. Do bear in mind that this ascending triangle isn’t in perfect set-up conditions as the usual set-up is for it to appear during a bull market however they can still produce good results in or after bear markets too. The market is likely to stay quiet until US Consumer Confidence tonight and if the result is a considerable difference to forecasts this could be the turning point for gold.