Thursday, May 31, 2007

Few Notes

  • There is probably an ongoing gold &silver options repositioning.
  • Gold / oil ratio should continue to move up (15).
  • Gold / silver ratio, many traders are probably taking this trade , not that wise especially for small or big trades, mid size can do better.
  • XAU, HUI indices seem to confirm the turn.
  • Trading continues to be internally technical.
  • If I read the chart correctly 680 shouldn't be very difficult for start.
  • The downtrend is dead, long live the uptrend.

Wednesday, May 30, 2007

XAUUSD Waves Update

Dear readers,

Gold have probably bottomed and in time will be headed higher to challenge recent highs at 700 U$D / 520 € / 83,000 ¥. Silver confirms this assumption and the silver /gold ratio shows relative strength.

Elliott Waves Cyclical view: The advance from the recent low consist of multiple sequences of intraday impulsive 5 waves patterns (visible on minutes charts). Despite the recent failed (v)[green] wave within the last (i) [blue] wave, the previous bullish Elliott wave count remains intact .

The count on the chart below is consisted of multiple first and second waves which are typical for extended third of the third waves. If the count is valid then the lion part of the advance is yet to be seen. I see no reason to mention upside target for now, as, the 700 $ level along the Euro and Yen targets need to be challenged first.

Again, Forex and Metals traders should note the possibility that gold and silver can go up along a rising USD index. (See chart here)

Strategy: buy pullbacks as long as spot silver above 12.37$ and gold spot above 632$.

XAUUSD (spot gold) daily chart


Thursday, May 24, 2007

ZG, GC & Spot Charts update

Gold options expire, futures contracts are rolled over (June to August), Statistics coming in at 8:30 and 10:00 AM. Technically the market is extremely indecisive and market participants wouldn't want to be heavily committed.

Elliott Wave update will be coming as soon as the picture gets a little bit clearer.

ZGM7 CBOT Gold Intraday (120 minute) chart


GCQ7 COMEX Gold daily chart


XAUUSD (spot gold) daily chart


Monday, May 21, 2007

Elliott Wave Principle

Dear readers,

Gold and silver caught some bids today and closed higher along a rising US dollar. Those of you who have been following my posts were certainly not surprised.

Some readers have emailed me with questions like: how do I make my gold price predictions (which are often very accurate) and what technical indicators I use for trading?

Well, I look at many different things: price & volume action, chart patterns, candle sticks, Fibonacci levels, moving averages, PPO, RSI, Stochastic, Inter market relationships, market sentiment and more. But above all cyclical analysis, namely Elliott wave analysis.

Elliott wave analysis is far from being a perfect tool (what is perfect?) However, as regards to making predictions Elliott waves counting when combined with other market indicators is the most valuable tool in my opinion.

Once you understand how the wave principal works, you will learn to respect the market opinion, you will stop looking for reasons to explain why the market is doing this or that. You will learn to accept the cyclical nature of waves.

One excellent book for learning wave analysis is: Elliott wave principle by Frost & Prechter.

By the way, I'm currently reading Prechter's latest book: How to Forecast Gold and Silver Using the Wave Principle. This 483 page book is an amazing documentary which aggregates all of the author gold and silver real time analysis between 1979 -2001.

I will post a more detailed review once I finish reading this book. For now I would just say that while Prechter is usually known for his bearish predictions, I was very surprised to read about some extremely bullish price objective for gold that might still be valid today.

Short term technical update:

The price of gold is still inside the downtrend channel.

ZGM7 – CBOT June Gold Intraday (120 minutes) chart

ZG (cbot gold) chart

Wednesday, May 16, 2007

Gold Channel Chart

The action today give the USD index a green light to go higher, don’t be surprised to see the Dollar index climbing higher for days, weeks and maybe several month.

As far as gold is concerned it is certainly possible that strengthening USD index will have less downside affect on the price of gold, but that remains to be seen.

For Fibonacci levels refer to the previous XAUUSD daily chart.

As always be cautious.

ZGM7 – CBOT June Gold Intraday (120 minutes) channel chart

Friday, May 11, 2007

Intraday Gold Chart

Dear readers,

Most assets rising in price today and the EUR/USD is higher, the price of gold is up. Positive liquidity which is oxygen for all assets markets appear yet again.

Technically: The price of gold managed to break above the sharp short term downtrend line. However, I opine that the last three candles on the daily chart are technically very bearish and that will have more implications going forward. The gold bears have spoken and showed forceful resistance.

ZGM7 – CBOT June Gold Intraday (120 minutes) chart below, annotated with Fibonacci lines and Elliott wave count

CBOT gold chart

Thursday, May 10, 2007

Drop & drop and drop...

Short term intraday turn up in the momentum indicators failed to materialize into rising gold prices. Gold then dropped like a rock below this month low.

A lower low after a lower high is technically bearish. Spot Gold is currently trading around the dreaded 666$ level.

The uptrend on the daily chart is still intact but might not hold.

Elliott wave cyclical point of view: I think we just witnessed a truncated v wave.

I'm not ready to get long term bearish here but more downside is certainly possible.

Spot Gold daily chart

spot gold chart

Wednesday, May 09, 2007

Gold Market Commentary

As yesterday low failed to hold a selling spree begun. Buyers quickly lowered their bids and the price of gold tumbled. Personally, I had a small short term speculative position which was immediately stopped out for a minor loss. When a FOMC is scheduled I never hold a large position. So it goes...

Technically the daily uptrend is still intact. HUI, XAU, and GOX actually finished the day higher but GDX closed lower. Silver pulled back less then it normally does on events like this.

CBOT June gold (ZGM7) intraday (120 minutes) chart

CBOT gold chart

Gold in nominal USD terms is trading near record levels. If you refer to long term gold charts you will easily notice that gold have been trading at current levels for very short periods of time. I mention this because I think that physical buyers see current levels as unsustainable and thus shy of buying large amounts of gold. Some more time might be needed to digest the current price level. Hence, egg pattern, prolonged incubation process then an inevitable hatch.

All readers are welcome to share their outlook, analysis and opinions. You can do so publicly by posting a comment on blog or privately by email

Tuesday, May 08, 2007

Gold Charts

Technically there is not much change… The uptrend on the daily chart is intact.

COMEX June gold (GCM7) daily chart- the price is still between the 50 %( 672.50$) and the 61.8 %( 695.8$) Fibonacci levels.

COMEX gold

CBOT June gold (ZGM7) intraday (120 minutes) chart – the price recently bottomed at 670.1$ and again at 684.1$ today. Bottom to top and top to bottom short term Fibonacci levels are added.

CBOT gold

Monday, May 07, 2007

Gold & the US Dollar

The last time the US Dollar index was around current levels gold was trading almost 250$ lower. In early 2005 a bottom in the USDX was realized and the Dollar climbed 11 points. At the same time gold was initially trading within a tight trading range till breaking out and rallying along the USD.

I have been watching some gold & USDX charts lately, my insights are:

The inverted correlation between gold and the USD is not reliable.

The scenario in which gold and the dollar are both trending higher might repeat again.

USD vs gold chart

Short term bottom seems to be in place (or near) for the USDX. If the Dollar will start to rally soon it might have an immediate negative affect on gold but that will be limited both in terms of price and time.

USD index

Friday, May 04, 2007

Intraday Wave v underway but ...

Dear readers,

The gold market showed strength in the face of rising USD Index. This fact which probably surprised some traders - will be very useful at a later stage of this gold global bull market.

Technically, as the price of gold broke above the short term downtrend line the bottom was confirmed. Gold then spent some time back testing the downward slope line and then headed higher. Once gold managed to exceed the highs of the day (yesterday) a flood of market if touched (MIT) buy orders were all over the place and the price was quickly marked up.

GCM7 Gold June Comex Intraday (120 min) chart

Gold June Comex intraday chart

There is literally tons of resistance from here all the way to 700$. This is the intraday wave v and once completed a correction will be needed.

GCM7 June COMEX Gold daily chart

COMEX Gold daily chart

To understand my technical work you must have knowledge of Elliott wave theory. You might want to check this online tutorial. For access you only need to be an Elliott wave international club member. If you can afford then order R. Precter book: How to Forecast Gold and Silver Using the Wave Principle.

Wednesday, May 02, 2007

Short Term bottom in place?

Dear readers,

Seems to me like intraday wave 4 is over and wave number 5 is underway which should exceed 698$ for the Comex June contract (GCM7). For the relevant Elliott wave count refer to this post.

A break above the short term downtrend line will give confirmation.

GCM7 Gold June Comex Intraday (120 min) chart

Comex intraday gold chart

Tuesday, May 01, 2007

Short Term Update

Dear readers,

The Europe session will soon begin and the short term momentum haven't turned up yet. So whether we like it or not short term downside still possible. The GC June contract (COMEX GCM7) is trading between the 50% and 61.8% Fibonacci levels. Long silver short gold spread trades haven't been profitable for a while so take note. As always, keep an eye on XAU, HUI and Of course EUR/USD & Crude.

GCM7 June COMEX Gold daily chart

COMEX Gold chart



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