Technicals | Dec 14 2017
Bottom Line 13/12/17
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 1211 / 1144 / 1081
Resistance Levels: 1313 / 1367 / 1409
Technical Discussion
Has the bitcoin price surge been to the detriment of Gold ? Some are seeing a correlation and it may well be a valid one. And if this is the case, as the growth of bitcoin and crypto-currencies in general potentially picks up pace over the coming years, Gold prices may well remain under pressure for some time to come. While gold has declined over 2% in the last month, bitcoin has more than doubled. Its certainly an interesting theory and perhaps worth taking seriously if you are a fan of the shiny metal. Tonight we are looking at the monthly chart, with some valid technical points certainly worth noting for traders and investors alike !
Reasons to remain cautious:
→ price chart has been damaged bigger picture so any recovery will take time
→ larger cycle 61.8% retracement still holding at 1054
→ looking for 1200 to hold shorter term
→ potential for lower still very real
In many ways Gold's monthly chart is similar to Silver's be it the lack of volume throughout the possible basing phase above 1080 strong support is a little concerning in many ways as it doesn't show the high volume characteristics generally aligned to accumulation or stopping volume. This may change at any time of course yet right at this juncture it does still open the door to lower prices being achieved well down the track which will mean strong support coming under pressure yet again at some stage, and possibly even being broken below.
The potential bearish triangle pattern shown on our chart tonight vs a basing pattern, certainly has negative consequences if price action continues to form in this manner. A break above 1409 is what is required to start turning things around, and even though 1367 was achieved just over a year ago, the monthly rejection bar off these highs has been clear for all to see. We were hoping we may have been able to find some encouraging signs of energy building taking place here, yet unfortunately right at this juncture there isn't any. Naturally enough low volume post a major downtrend could mean that sellers are waning as well, yet either way we are going to need to see a major pick up in monthly volume, attached to some positive price bars, before we are going to be able to get excited about Gold again. It's always good to check in on the monthly chart every now and then to a get a clearer longer term perspective on things, be it what we have found tonight is a price chart that is clearly lacking any signs of bullish intent.
Trading Strategy
After analysing the monthly chart I'm going to throw it out there and state that our recent attempts to trade Gold and Silver long were ill-conceived. They were low risk entries which is what we like, and sometimes there is validity in trading basing patterns shorter term if the range is wide enough, yet generally speaking we are trend followers, and both precious metal contracts have clearly not shown any signs of trending to any great extent for a number of years now. Downside risk is still there with Gold as mentioned, and only a move above 1367 and then 1409 is going to have the potential to start driving some upside momentum. We will keep an eye on it yet overall price action is continuing to look very weak indeed.
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