|
Gold Daily Update ~ Oct 14 2014
Trend
Long Term ~ Bearish- Need a monthly close above 1800 to confirm the bull market final phase underway. Need a monthly close above 1560 to neutralize the trend.
Medium Term ~ Neutral– Gold needs to close above 1294 on a weekly and monthly basis for bullish outlook.
Intermediate Term ~ Neutral
Short Term ~ Bullish
Initial Resistance 1240-1244 2nd tier 1256-1265
Initial Support 1226-1230 2nd tier 1211-1218
Futures Euphoria Deflated By Latest Batch Of Ugly European News: Germany Can't Exclude "Technical Recession"
Submitted by Tyler Durden on 10/14/2014 - 06:47
So far the overnight session in Europe has been a mirror image of Monday's, when futures languished at the lows only to ramp higher as soon as Europe started BTFD. Today, on the other hand, we had a rather amusing surge in the AUDJPY as several central banks were getting "liquidity rebates" from the CME to push the global carry-fueled risk complex higher, only to see their efforts crash and burn as Europe's key economic events hit. First, it was the Eurozone Industrial Production, which confirmed that the triple dip is well and here, when it printed -1.8%, below the expected -1.6%, and far below last month's 1.0%. This comes in the month when German IP plunged most since 2009, confirming that this time it's different, and it is Germany that is leading Europe's collapse into the Keynesian abyss not the periphery. And speaking of Germany, at the same time Europe's former growth dynamo released an October ZEW survey of -3.6%, the 10th consecutive decline and well below the 0.0% expected: first negative print since late 2012!
Barclays reminds us, today is when the European Court of Justice (ECJ) is scheduled to hear testimony on the ECB’s non-existent Outright Monetary Transactions program (OMT). Recall that the OMT is the imaginary (again: non-existent) byproduct of Draghi's "whatever it takes" speech: a byproduct that was supposed to exist purely in the imaginary realm (as it was merely a verbal bluff, one which was never meant to be actually activated), and never actually take practical shape (hence, why the OMT's legal term sheet still does not exist, over two years later). Sadly for Draghi, and the entire Deus Ex theater that managed to send European peripheral bonds from record wide yields to record low, today it will attain some much dreaded shape.
Gold Overview
So far the gold bounce has been strong but interestingly it is the weakest when compared to platinum, palladium and silver. Silver bottomed one day earlier than the rest of the metals.
In gold it is looking like either 1240-1243 or 1256 to 1260 will be the target for this bounce from the lows established last Monday. The most likely peak this week is Wednesday at one of the two mentioned price areas.
A pullback to the 1218 area would be a 38% retrace if gold holds resistance at 1240 and 1211 would be a 50% retrace. Those are the most conservative points for those looking for short term trade on the long side.
Gold chart from This Year’s Peak
If the low at 1180 last December 31st was the bottom in gold and the first wave up was the peak of March 17th, then we could view this pullback as the 2nd of five waves in gold. Wave 2’s are allowed up to a full retracement and last week’s low at 1182 is within the parameters of that scenario and wave 2 would have just completed an A-B-C correction. If this was the case, then a powerful wave 3 in gold is beginning.
However at this time we cannot yet exclude the potential that we are still in wave 4 and that a final wave 5 down in gold is still forthcoming.
Right now there should be strong resistance at 1240-1243 and odds favor a pullback to either 1211 or 1218 should develop from there.
 
CYCLES
Odds favor the medium term cycle is complete and the good news is that we have the short term cycle (Oct 8th – plus or minus 72 hours) favoring a low with a bounce into the 23nd of Oct (plus or minus 72 hours). Key here is we finally have a blue cycle turn at the lows of price instead of the highs. That’s the rotation we need as it favors a bullish trend. On a medium term basis, it is possible that gold is going to rally into the end of the year. The key there is for gold to break above 1240-1260 and get a weekly close above 1272.
HUI
Intermediate Term Trend ~ Bearish
Intermediate Term Moving Averages 197.63 – 201.97
The bearish trend has not yet neutralized from the downside as the resistance hit on Wednesday has caused a pullback. The only current support is at 185-189 and resistance remains that channel line and the moving averages.
If we can get above 206 on a closing basis, then 215-220 will become the target resistance going into Oct 23rd.
NUGT
Intermediate Trend – Bearish
Moving Averages – 23.60 – 25.63
When Nugt broke below 40 there was no trend line until 20 and it was hard to believe that it would go that low before a bounce. But that is where the exact bounce came. We’re at support right now and additional support is the line at 17.50. The trend is still down on NUGT.
Gold Medium Term
Long Term Trend ~ Bearish since Oct 2013 @ 1361
Long term Moving averages 1508 – 1553
Medium Term Trend ~Neutral – Gold needs a monthly close above 1292 to return to a bullish mode.
Gold was able to reverse at the gold downtrend line that was violated last Monday. The key now going forward is whether gold is going to be able to re-enter and move above the GREEN up trending channel lines and make them the support area for gold. For now that gold trend line is support but any breaks below 1155-1172 in gold would favor another leg down. For now that gold trend line is support and the green trend lines are going to be resistance on a medium term time line.
GOLD ETF GLD
Moving Average Trend ~ 116.88 – 117.17 BULLISH
Building up for one position, so it’s not a backing up the truck purchase.
This should be 1 stock position in your portfolio – NO MORE THAN THAT.
BGT ¼ of a position at 153 on 3/7/13 and ¼ at 145 on 4/14/13 and ¼ at 131 on 4/16 and ¼ at 125 on 6/20
GLD intermediate trend has moved to bullish. The key now is to hold the downtrend line. The next resistance is 119.60 and then the trend line at 121. If we pullback and support at the downtrend line odds favor we’re heading to 121.50 into the 23rd of October.
GDX Gold Stock ETF
Intermediate term Trend 21.59- 22.04 ~ Bearish
The moving averages and the trend line are provided resistance on GDX. We need a close above 23 to neutralize the trend. There is no firm support yet but 20.70 has a minor support. The trend remains down, but a bounce is underway.
What Next?
We’ve had a bounce at the same spot as the two 2013 lows. Odds don’t favor it holding on the longer term but a hard bounce off an oversold condition is taking place.
Gold moved to short term bullish last Thursday when it closed above 1213 . For now a bottom and a bounce has occurred. Odds favor it continues into Oct 23rd (plus or minus 72 hours). There should be a peak this week at the 1240-1243 area and a pullback to 1211-1218. If we hold there then the potential for gold to move to the 1255-1265 area will come into play going into October 23rd (plus or minus 72 hours).
Bottom Line
Gold looks to have made its medium term cycle low. It is possible that gold is setting up to form a rally much like we saw from January to March 17 of this year. In order to get more confirmation of such an event, gold would have to get a weekly close above 1272. That would target 1322 to 1372.
For now the first target area is the 1240-1260 area.
| 
