What is the gold bugs are wrong in their expectations?
There seems to be a prevailing view (hope/wishful thinking?) here that after the FOMC Gold will penetrate the multi-year bearish trend-line and will hit the next resistance target around $1,433 (the three year-old, Aug 28, 2013 peak, to be precise).
But what if the majority is wrong, which, obviously, is the contrarians' bread and butter.
Is anyone interested in either:
1) playing a contrarian role and provide strong technical arguments why the majority is wrong indeed; or
2) providing arguments why the chart above is flawed.
I suggest such discussion, if approached professionally, would help all of us here, betting on the bullish trend in Gold, to become better prepared for Sep 21.
For example, as you might know, ProJack's vision is that Gold may continue falling after the next Wed, at least down to $1,250-sh. However, he seems to be looking at it only from the support/resistance prospective, ignoring the current year uptrend line. But such rather focused-view approach doesn't necessarily invalidates the possibility...
But what if the majority is wrong, which, obviously, is the contrarians' bread and butter.
Is anyone interested in either:
1) playing a contrarian role and provide strong technical arguments why the majority is wrong indeed; or
2) providing arguments why the chart above is flawed.
I suggest such discussion, if approached professionally, would help all of us here, betting on the bullish trend in Gold, to become better prepared for Sep 21.
For example, as you might know, ProJack's vision is that Gold may continue falling after the next Wed, at least down to $1,250-sh. However, he seems to be looking at it only from the support/resistance prospective, ignoring the current year uptrend line. But such rather focused-view approach doesn't necessarily invalidates the possibility...
Komen:
The title to this post should have obviously said "What IF the gold bugs...". Missed the typo.
Komen:
Though common belief currently is that after 5 years of decline Gold finally started the multi-year rally towards the 2011 all-time high, it might not necessarily be the case. The falling wedge that began forming after Gold peaked at $1,920 might not have finished fully developing yet.
Since Gold still hasn’t penetrated the bearish trendline, the expectations are that the Sep 21 no-rate hike decision will give the metal enough of an impulse to bounce off the current year raising trendline in order to drill in the bearish ceiling a hole, large enough to escape for good.
However, if the 2011-2016 pattern turns out to be a textbook’s falling wedge, the chart below is sketching the next few years’ precious metal’s potential movements.
The period by the end of 2016 becomes a critical stretch of time that will be setting Gold up for the following decade.
Despite all the bullish enthusiasm around, at this point there are three not quite impossible scenarios that could push Gold back into falling wedge formation:
1) Sep 21 FOMC decision to hike the rate. Though the chances are currently estimated at slim 15%, until the opposite decision has been made public such move still remains a possibility. In this case the bullish trendline will likely get damaged beyond repair;
2) Sep 21 FOMC decision to keep the rate intact will likely send Gold back to $1,350 area but the impulse might not be strong enough to penetrate the bearish trendline, which, in turn, could change the sentiment from bullish to bearish and Gold suddenly becomes shorted like there is no tomorrow;
3) The bearish trendline will get penetrated but upon backtest will prove to be not strong enough to hold (i.e. the combined buying force of bulls will not be able to withstand the shorting momentum from the new high).
I hope the above will remain a pure speculation, none of the scenarios will ever unfold, and Gold will indeed continue its upward move. But if this post has made you thinking about your strategy in case the things are not unfolding as planned, that’s good enough for me. I would also appreciate comments in the constructive criticism form.
Since Gold still hasn’t penetrated the bearish trendline, the expectations are that the Sep 21 no-rate hike decision will give the metal enough of an impulse to bounce off the current year raising trendline in order to drill in the bearish ceiling a hole, large enough to escape for good.
However, if the 2011-2016 pattern turns out to be a textbook’s falling wedge, the chart below is sketching the next few years’ precious metal’s potential movements.
The period by the end of 2016 becomes a critical stretch of time that will be setting Gold up for the following decade.
Despite all the bullish enthusiasm around, at this point there are three not quite impossible scenarios that could push Gold back into falling wedge formation:
1) Sep 21 FOMC decision to hike the rate. Though the chances are currently estimated at slim 15%, until the opposite decision has been made public such move still remains a possibility. In this case the bullish trendline will likely get damaged beyond repair;
2) Sep 21 FOMC decision to keep the rate intact will likely send Gold back to $1,350 area but the impulse might not be strong enough to penetrate the bearish trendline, which, in turn, could change the sentiment from bullish to bearish and Gold suddenly becomes shorted like there is no tomorrow;
3) The bearish trendline will get penetrated but upon backtest will prove to be not strong enough to hold (i.e. the combined buying force of bulls will not be able to withstand the shorting momentum from the new high).
I hope the above will remain a pure speculation, none of the scenarios will ever unfold, and Gold will indeed continue its upward move. But if this post has made you thinking about your strategy in case the things are not unfolding as planned, that’s good enough for me. I would also appreciate comments in the constructive criticism form.
Komen:
Here is also DXY chart compared to XAUUSD, which also supports the described above doomed scenario for Gold. There is, obviously a strong inverse correlation between the precious metal and the world's most wanted currency.
SignalSwiss published a similar long-term bullish view on USD little while ago but I just can't find it at the moment to link it to my post. If I come across it later on, I'll re-twit it here.
And apologies for two repetitive posts down below - I kept publishing this chart in the wrong box. I'm still new to the UI of this site.
SignalSwiss published a similar long-term bullish view on USD little while ago but I just can't find it at the moment to link it to my post. If I come across it later on, I'll re-twit it here.
And apologies for two repetitive posts down below - I kept publishing this chart in the wrong box. I'm still new to the UI of this site.
Komen:
Someone could have identified and published this somewhere already, so I'm not claiming to be the discoverer. But, for whatever reason, it did not occur to me until today.
Potentially developing multi-year cup'n'handle in Gold?..
Potentially developing multi-year cup'n'handle in Gold?..
