{"id":116817,"date":"2017-11-20T12:52:45","date_gmt":"2017-11-20T17:52:45","guid":{"rendered":"http:\/\/countingpips.com\/?p=116817"},"modified":"2018-06-01T15:49:10","modified_gmt":"2018-06-01T15:49:10","slug":"gold-in-contradictory-position","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/11\/gold-in-contradictory-position\/","title":{"rendered":"Gold in Contradictory Position"},"content":{"rendered":"
November 20, 2017<\/div>
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By The Gold Report<\/b><\/p>\n

Source: Clive Maund for Streetwise Reports<\/em> \u00a0\u00a011\/19\/2017<\/a><\/b><\/p>\n

The signals for gold are mixed, says technical analyst Clive Maund, who delves into the ramifications.<\/p>\n

Gold appeared to break out on Friday, but the situation is
\ncontradictory because on its price charts it appears to be in position
\nto begin another upleg within an uptrend, but its COTs are still neutral\/bearish at best, and don’t appear to allow much room for a rally,
\nwhile the dollar Hedgers chart is still calling for the dollar to
\nadvance, despite its downturn last week.<\/p>\n

On gold’s 6-month chart we can see how, after weeks of indecisive
\nsideways movement, it broke sharply higher on Friday, looking like it
\nhas aborted the potential Head-and-Shoulders top that we earlier
\nobserved. With the rising 200-day moving average having pulled up
\nbeneath the price, it is in position for another upleg, especially as
\nthe 50-day has dropped back to close up with the price and 200-day,
\ncreating a bullish bunching of all three.<\/p>\n

<\/center>
\nWhile volume was unimpressive on Friday’s rally in gold, such was not
\nthe case with gold proxy GLD, which DID break higher on impressive
\nvolume\u0097the highest since early September. This is a positive sign.<\/p>\n

<\/center>
\nThe 2-year chart for gold enables us to see clearly what is going on.
\nFriday’s break higher looks like it marks the start of another
\nintermediate uptrend within the now clear channel shown, after the price
\ndropped back to ease its earlier overbought condition and test the
\nsupport level shown and the support at the lower boundary of the
\nchannel. The potential Head-and-Shoulders top that we saw earlier will
\nprobably soon be history. There has been a very noticeable build up in
\nupside volume in recent weeks, resulting in strong volume indicators,
\nespecially On-balance Volume, which is at new highs. These volume
\nindications certainly augur well for gold in coming weeks.<\/p>\n

<\/center>
\nAgainst the now positive picture on the gold charts we must weigh the
\nlatest gold COT data, which is still neutral\/bearish, as normally
\nwrong Large Specs are still holding a big long positions, although they
\nhave eased somewhat, allowing room for a rally.<\/p>\n

<\/a><\/center>Click on chart to pop up a larger, clearer version.<\/p>\n

We will end now by looking at the dollar and its Hedgers chart. On the
\n9-month chart for the dollar index we can see the Head-and-Shoulders
\nbottom that it broke out of last month. Following the breakout it has
\nreacted back over the past week or so to the extent that many are now
\nwriting it off again. As we can see it is now dug into support near to
\nthe upper boundary of the Head-and-Shoulders bottom and is also at
\nsupport at its rising 50-day moving average, and the big question is
\nwhether this support is enough to turn it higher again, especially as
\nits longer-term charts look rather grim. The answer to that is that it
\nprobably is, because of the bullish Hedgers positions that we will now
\nlook at.<\/p>

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<\/center>On the latest Hedgers chart we can see that Hedgers’ net positions are
\nnow at levels that in the past have always led to a significant rally,
\nand that therefore is what we can reasonably expect to see again. This,
\nneedless to say, would complicate the outlook for gold and other
\ncommodities (copper’s latest COTs are still quite heavily bearish).<\/p>\n

<\/a><\/center><\/p>\n

Click on chart to pop up a larger, clearer version.<\/p>\n

Chart courtesy of www.sentimentrader.com<\/i><\/p>\n

So how do we reconcile the now bullish looking gold charts, especially
\nthe 2-year chart, with the still bullish looking dollar index chart, and
\nespecially its latest Hedgers’ chart? With difficulty, that’s how. Here
\nwe should note that it is possible for the dollar and gold to rally
\ntogether, although this is a rare event that would involve gold
\noutpacing the dollar, which could happen for example if money flooded
\nout of Europe into the U.S. as a relative safe haven, and also into gold
\nfor the same reason. One scenario that is considered quite likely is
\ngold rallying up within its uptrend channel to the band of resistance in
\nthe $1360\u0096$1380 area where a COT extreme develops (which it is not
\ntoo far off now) before stalling out and dropping again.<\/p>\n

An effective strategy for pragmatic traders to play this situation is to
\nbe long the Precious Metals sector now, following the buy signal on
\nFriday, and to start taking profits on gold arriving at the resistance
\nlevel in the $1360\u0096$1380 area and especially if it should make it all
\nthe way to the upper boundary of the channel shown on our 2-year chart.
\nAlternatively, positions should be scaled back if it breaks below the
\nlower boundary of the channel and especially if it breaks below the
\nsupport level at about $1260.<\/p>\n

Finally it is worth pointing out that we are perfectly well aware of the
\nprice suppression of gold being undertaken in the paper market as the
\nphysical supply continues to tighten, and that the Chinese and Russians
\nare wisely taking the opportunity this presents to vacuum up much of the
\nWest’s gold on the cheap, so that later, and quite possibly at a time
\nof their choosing, they will be able to bury the dollar and forcibly put
\nthe self-appointed global policeman with its 700-plus military bases
\naround the world “out to grass” as a result of its being economically
\nground into the dust. At that time, when the Chinese may back the Yuan
\nwith gold, gold will reassume its central and traditional role and is
\nlikely to soar due to the extremely high level of paper assets relative
\nto gold. A growing awareness of the raw power that China now wields is
\nthe reason why the U.S. has suddenly started being nice to China, which
\nhas noted and learned the lessons from the U.S.’ treatment of Russia.<\/p>\n

Clive Maund<\/i><\/a> has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.<\/p>\n

Want to read more Gold Report<\/i> articles like this? Sign up at www.streetwisereports.com\/get-news<\/a> for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews<\/a> page.<\/p>\n

Disclosure:<\/b>
\n1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
\n2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer<\/a>. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.<\/p>\n

Charts provided by the author.<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

By The Gold Report Source: Clive Maund for Streetwise Reports \u00a0\u00a011\/19\/2017 The signals for gold are mixed, says technical analyst Clive Maund, who delves into the ramifications. Gold appeared to break out on Friday, but the situation is contradictory because on its price charts it appears to be in position to begin another upleg within […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-116817","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/116817","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=116817"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/116817\/revisions"}],"predecessor-version":[{"id":116819,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/116817\/revisions\/116819"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=116817"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=116817"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=116817"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}