Technical Analysis

From an intraday perspective, we can count an impulse lower and we are seeing RSI divergence within the fifth wave. As a result, a bump higher may ensue to alleviate the oversold pressure. If a bounce develops, we are anticipating it to be a partial retracement of the September 10 October 6 down trend.
$1290-$1310 might be an initial zone of resistance. Any strength would be seen as corrective with the potential for another leg lower of similar size and length as the $97 per ounce down trend.

From a sentiment perspective, the ratio of net long traders has shot higher to +4.1. Sentiment is a good contrarian tool so with the majority of traders net long, we would use that as a signal to short.

more...

Yesterday, the DAX traded higher but found sellers and reversed. It wasn’t a ‘nasty’ reversal-day but the intra-day range of about 90 handles was the largest since the last trading day of September. It’s been a difficult little stretch indeed, with minimal volatility. That could be about to change.

The mini surge higher and reversal out of the high-level consolidation formation is the kind of price action we were looking for as a sign-post a pullback may be in store. A drop below the consolidation low at 12909 will undermine not only the congestion pattern but also put the index back below the record high recorded in June. In this case it is reasonable to expect at the least we see a move towards the swing-high from July beneath 12700. Even if the DAX is to trade to new heights the market is in need of a pullback.

Next week, the ECB meets on Thursday and we’ll learn more about the path Draghi and company want to take with regard to its QE program.

more...

The Nikkei 225 has powered up to 26-year highs this week and this is only the latest chapter of an astonishing run higher which began in early September.

Fundamentally the Tokyo equity benchmark’s vigour is partly explained by the return of Prime Minister Shinzo Abe in October’s snap election. A better-than-expected second-quarter earnings season has also helped. Around 62% of listed companies managing to beat estimates, with heavyweights like Sony, Honda and Toyota all pleasing the crowds. Wall Street’s succession of highs and a rising US Dollar have done the rest, taking the index up by more than 20% for the year so far.

Despite such chunky gains the index appears to be retaining its vigour. Indeed, Thursday’s trade could see it break the uptrend channel which has contained the climb since September the 8- to the upside.

more...

Coming into the year, Gold prices were dropping like a rock. This was on the back of the surge being seen in the U.S. Dollar as the ‘Trump Trade’ got further priced-through capital markets. But as that Dollar strength viciously turned into aggressive weakness in the first quarter of the year, Gold prices began to lift-higher. This lasted all the way into June, where a double top around the $1,296 level finally initiated some element of resistance. This is a level that remains resistant, as we saw just last week when price action tried to break through on Monday, Tuesday and Wednesday; only to fail as sellers pushed back down towards the confluent support zone that we’ve been following.

Once either of these sides give way, traders can begin plotting longer-term directional approaches in Gold. Until then, be cautious around getting caught in between the cracks of support and resistance on near-term Gold charts.

more...

Yesterday, the S&P 500 declined off the top-side slope extending over from a peak created in April 2016. It’s the same slope the market experienced a gap reversal off of on 12/4. At that time, the S&P looked poised to start rolling downhill towards support around 2600, but as has been the case during this latest run the dip was quickly bought. Will buyers snatch up stocks so quickly on weakness this time around? Recent history says, yes, that in all likelihood we will see a dip bought, and probably sooner rather than later. The trend is up and seasonality is favorable, so it’s hard to argue against the case that mild weakness won’t end up as another ‘buy-the-dip’ opportunity.

The sequence has been pretty clear the past few months, with higher-highs and higher-lows marking a strong trend. In the event that market halts its decline ahead of that key low and turns higher, creating another higher-low, it will be viewed as a positive and eyes will turn back towards the April 2016 top-side slope and new record highs. On the flip-side, if we see selling accelerate and 2624.75 is snapped, then we may be in for a larger decline back towards support around 2600.

more...

Spot Gold: Retail trader data shows 69.7% of traders are net-long with the ratio of traders long to short at 2.3 to 1. The number of traders net-long is 7.4% lower than yesterday and 19.0% lower from last week, while the number of traders net-short is 4.7% higher than yesterday and 2.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Spot Gold price trend may soon reverse higher despite the fact traders remain net-long.

more...

Spot Gold: Retail trader data shows 64.5% of traders are net-long with the ratio of traders long to short at 1.81 to 1. The number of traders net-long is 2.6% lower than yesterday and 12.8% lower from last week, while the number of traders net-short is 5.4% lower than yesterday and 12.7% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Spot Gold trading bias.

more...

Bitcoin in danger of breaking confluence of support, important slope under pressure

This morning we are seeing a sizable drop in cryptocurrency-land, with double-digit percentage declines taking place across the board. Bitcoin is in real danger of breaking critical support by way of a slope extending higher from May and horizontal levels.
The slope dating back to May is viewed as rather significant given its influence on several occasions since, most recently in November. While it has always been a form of resistance, once it was broken it became a source of support.
The May slope along with price levels during December make the ~11700/150 price zone an important one. Hold and Bitcoin lives to fight another day, possibly building the descending wedge we discussed last week. Break, and the trend-line from July in the low 10000s and worse (maybe much worse) come into play.

BTC/USD: Daily

Litecoin also in danger of support-break, eliminating wedge possibility

Litecoin is probing support, with a slight breach below the 200-level taking place this morning. It would mark a lower-low if it does hold below, and the spike-low at 173.68 would be up next as support.
A break below both levels could lead to a much larger decline. A hold of support through today will still keep life in Litecoin, but it will need to quickly turn higher if it is to maintain a neutral to bullish technical backdrop (keep a descending wedge still in play).

LTC/USD: Daily

Ethereum trend-line at risk or breaking, if it does then 863 targeted

Ethereum is in danger of breaking the trend-line from December if today’s sell-off remains as is, or deepens. There is minor support at 965.18, but the level of bigger interest is the December 19 high at 863. Below there we will then have to turn to the trend-line from November in the mid-700s.

ETH/USD: Daily

more...

The gold price trends have been sloppy since December 2016. That sloppy behavior is evidence of a three-wave move, a correction. Therefore, the current increase in gold prices may not last long.

The break above $1357 eliminates the near term triangle possibility and indicates the rise since December 2016 is a large ‘B’ wave. ‘B’ waves tend to be sucker waves that are sloppy and overlapping and the trend for the past year fits that description. The Elliott Wave analysis calls for gold prices to remain below $1465.

Our gold price forecast is for a bearish reversal to occur between now and $1465. Though that is a large region, we can use simple technical analysis to help us enter into the bearish reversal. For example, a break below $1306 would begin to carve a lower low in gold prices. A successful move below $1306 will allow us to analyze the charts for a bearish 5-3 wave sequence. The bearish 5-3 wave pattern would allow us to use the swing high as a risk level.

more...

With yesterday’s close below 13222 (a small lower-low from 1/25), the DAX is positioned for lower prices. Next up is 13137, the 1/17 low. With an acceleration in selling below support the August trend-line will quickly come into play, and then the more important trend-line dating back to June 2016. These two lines arrive in the vicinity of 13000/12900.
From the tactical standpoint, the path of least resistance is down, favoring short-sellers. To turn the picture bullish, it will require momentum to turn around, and soon; even then there has been a decent amount of technical damage since notching a record high just last week.

more...