Gold - Expect Near-Term Weakness
Gold has had a great run, however i believe that we may very well see a slight easing before continuing higher, firstly let's look at some charts.
Gold is below the daily 21 ema - This means that so long as we remain below this level, near-term the bears are in control.
Gold has retraced to the weekly 10 ema - This is healthy within a strong bull market, to periodically return to these longer-term moving averages, but also note the highlighted regions when price fell below this moving average.
Gold has YET to retrace to the monthly 5 ema - This, coupled with the monthly doji candle from August (signals indecision) leads me to believe that we will experience a drop to test the monthly 5 ema, currently around $1890 USD.
Furthermore, the monthly stochastic is signaling a likely cross to the downside, all of this together leads me to believe that a move lower to test the monthly 5 ema, possibly even overshooting slightly lower to around $1800 is entirely on the cards.
All this coupled with the sudden profit-taking in the stock market over the Thursday and Friday trading sessions leads me to believe that further weakness could kick next week off, not to mention the grossly overbought conditions within the stock market, from the put/call ratio, to the SKEW, to the spike in the VIX.
It is worth mentioning that the cryptocurrency market also had a sharp selloff, PRIOR to the stock market selloff, what this says to me is that money is not merely rotating out of one asset and into another, but rather it is leaving the market as cash.
We can also see the DXY strengthening (albeit only slightly, and within a stronger overall downtrend), this is also a major headwind for gold, as i wrote earlier, that a stronger dollar will reflect in a weaker gold price (generally speaking).
I may very well be wrong, however i will personally be easing some of my exposure to see how things shake out.
I also want to reiterate, i am very bullish on precious metals (hence the physical holdings) and i believe that the stock market will be a major beneficiary of truly awesome levels of inflation, however i am getting a slightly eerie, calm before the storm feeling and will be freeing up some capital to take advantage should that opportunity arise.
-TradingEdge
Gold is below the daily 21 ema - This means that so long as we remain below this level, near-term the bears are in control.
Gold has retraced to the weekly 10 ema - This is healthy within a strong bull market, to periodically return to these longer-term moving averages, but also note the highlighted regions when price fell below this moving average.
Gold has YET to retrace to the monthly 5 ema - This, coupled with the monthly doji candle from August (signals indecision) leads me to believe that we will experience a drop to test the monthly 5 ema, currently around $1890 USD.
Furthermore, the monthly stochastic is signaling a likely cross to the downside, all of this together leads me to believe that a move lower to test the monthly 5 ema, possibly even overshooting slightly lower to around $1800 is entirely on the cards.
All this coupled with the sudden profit-taking in the stock market over the Thursday and Friday trading sessions leads me to believe that further weakness could kick next week off, not to mention the grossly overbought conditions within the stock market, from the put/call ratio, to the SKEW, to the spike in the VIX.
It is worth mentioning that the cryptocurrency market also had a sharp selloff, PRIOR to the stock market selloff, what this says to me is that money is not merely rotating out of one asset and into another, but rather it is leaving the market as cash.
We can also see the DXY strengthening (albeit only slightly, and within a stronger overall downtrend), this is also a major headwind for gold, as i wrote earlier, that a stronger dollar will reflect in a weaker gold price (generally speaking).
I may very well be wrong, however i will personally be easing some of my exposure to see how things shake out.
I also want to reiterate, i am very bullish on precious metals (hence the physical holdings) and i believe that the stock market will be a major beneficiary of truly awesome levels of inflation, however i am getting a slightly eerie, calm before the storm feeling and will be freeing up some capital to take advantage should that opportunity arise.
-TradingEdge
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