Saturday, December 27, 2014

A few wishful(?) end of year thoughts on Gold and USD

As we are heading towards the end of the year, we would like to share with you a few of our thoughts on Gold and USD. The following scenario is a byproduct of blending a delicious turkey dinner and a lot of wine with discussions about cycles, fractals, politics, physics and religion...

We would like to thank and wish all our readers a Happy New  Year and a very Profitable 2015!

Monday, December 22, 2014

Gold and Gold Miners still in bear mode-update

As we noticed almost 2 weeks ago (gold-and-gold-miners-still-in-bear-mode) Gold followed our preferred (pink) scenario and moved towards 1240$ where it bounced.

We can see some similarities of price action between October and from November until now (blue boxes).We believe that Gold will probably move fast initially towards 1100 and then 1000$

Gold Miners broke below the weak support line at around 18,5. Now this line is a weak resistance line which is converging with a descending resistance line (black line) and the EMA55(daily). There is a cluster of resistance between 18,5 to 20-21$ that is highly unlikely for GDX to penetrate.

Therefore we believe that GDX soon will move towards 14$ and then even 11$ where there is a good support zone as you can see in the following $HUI chart (100 HUI level=aprox 11 for GDX)

Sunday, December 14, 2014

Energy stocks (XLE) death cross

As we predicted in this post (2014/10/energy-sector-xle-kol-short-term-bounce) energy stocks (XLE) bounced at 88$ and then resumed their descend towards 73$ ( 73,89$ 12-12-14 intraday low). Also EMA21(weekly) just crossed EMA55(weekly) which is a death cross event. Unless XLE reverses and starts rallying immediately, we expect a move initially towards 60-65$ where there is a support zone from 2009,2011,2012 .If price manages to break this zone then a move towards 50-55$(support zone from 2008,2010) is very likely.

Tuesday, December 9, 2014

Gold and Gold Miners still in bear mode

Gold is still in a downtrend at around 1206 during typing this lines.There is a descending resistance trendline from late 2012 (weekly chart black line) currently at 1250$ and a positive divergence in weekly RSI (blue line)

During the last few days gold is in a tight trading range between 1190-1210$(practically between Daily EMA21 and EMA55).If gold manages to stay above 1210 we believe that it will move towards 1230-1240 where it will bounce and resume its downtrend with a fierce move towards 1000$(pink line).
If gold breaks below 1190$ then it will resume its downtrend towards initially 1110 and then 1000$(red line).We give 60% to the former and 40% to the later scenario.So be cautious with the interpretation of the current upmove from 1140$...

Regarding the Gold Miners (GDX), the picture is the same.If GDX manages to stay above 20$ then next target is 21-22$ where it will probably bounce and resume its downtrend towards 10$.If it breaks down below 18,5, probably it will move towards initially 14-14,5$ and then lower.

Friday, November 28, 2014

Gold: Still bearish-some potential to move towards 1220$

Gold is currently in a counter-trend. If gold manages to stay above 1180 for a few days more then it can move gradually up to 1220 (EMA(daily)-55 and descending trendline of the current downmove from July)  where probably it will bounce and resume its downtrend towards 950-1000$. If Gold is going to loose 1180 level sooner rather than later then it will probably resume immediately its downtrend.The Swiss gold referendum could be a catalyst event for gold price.We believe that as long as Gold stays below 1250-1260$ there is a low possibility for a substantial long-lasting rally.
Thick black line:Descending trendline from Sept 2012
Thin black line :Descending trendline from July 2014
Green line: Weak support level at 1180$

Thursday, November 20, 2014

Silver price:2 scenarios

Silver is in the current downtrend since mid-summer 2014 and it is probably moving towards 14$ (even 13).
Currently silver is in a countertrend with the following resistance levels:
1.Exponential moving average 21 (daily):16,26$
2. Exponential moving average 55 (daily): around 17$,where there is a resistance level from 2008,2009 and 2010
If Silver manages to stay above 16 and above EMA21 then the next critical level is 17$.From there we can see 2 scenarios:
A)Bullish(blue):Silver goes above 17 and then may form an inverted head an shoulder (Neckline 17,5$,  target 20$)
B)Bearish(red):Silver bounces at 17 and then moves towards 14$.It is our preffered scenario.

Friday, November 14, 2014

Alternative Energy entering a Bear market?

Alternative Energy ETFs like Solar Energy (TAN) and Wind Energy (FAN) have already broken their support trendlines and after a period of distribution (especially for TAN).Next targets for TAN 25 and 14$.

Next targets for FAN 8 and 6$

Tuesday, November 11, 2014

Gold towards 1000$: A Final bottom?

Gold is currently heading towards 1080-1100$ where it will probably bounce towards 1140$ and then resume its downtrend with a final leg towards 1000$.There is a significant support zone at around 950-1000$(green zone)

Bollinger Band width and Mass index indicator have already started to move upwards and with a fast move of gold price towards 1000$ these indicators can easily move above 20 and 26 respectively.In that case they will trigger a second buy signal according to our previous study (Gold mass-ive trend change).

 We believe that 950$-1000$ will be the final bottom for this gold bear market that started in 2012. 

Monday, November 10, 2014

Agricultural Commodities (DBA) : Final leg down

As we predicted in mid summer 2014(01-07-2014) ( Agricultural commodities ETF followed a downtrend and broke down below 26$
Our bearish prediction

Currently DBA is in a neutral condition between 25-26,5.However we still favor our bearish scenario. There is a good possibility for DBA to move initially towards 24$ and then 22-22,5 (where there is a strong support zone) and bottom out at these levels at approximately spring-summer 2015.There is still a bullish scenario in the cards if DBA manages to move above 26,5$, although we think it is unlikely to materialize.

Saturday, November 8, 2014

Uranium (URA): Still in bear mode

As we predicted in early October (09-10-14) ( Uranium ETF (URA) bounced exactly between 11-11,5 and is now moving fast towards around 13,5 and possibly even 15$.

Tuesday, November 4, 2014

Crude near an intermediate bottom?

Crude ($WTIC) had recently a huge quick drop from around 105$ to 77,5$ currently.November to January is historically a weak period for crude price as seasonality charts prove.

There is a substantial resistance area at 75-77,5$.Weekly RSI is already in oversold territory and up to now there wasn't any significant pullback of the current sharp downmove.

On daily chart there are few signs of positive RSI divergence.

There are growing signs that crude is approaching a possible intermediate bottom at around 75$.We believe that in next 1 or 2 weeks crude will pause its downmove and then a trading range between (roughly) 76-83$ will follow until possibly early next year(blue box).

Friday, October 31, 2014

Gold and Miners already started next leg down

Just a quick update.Gold and miners (GDX) didn't manage to move sideways this week.In fact GDX had yesterday a huge drop.Gold and GDX probably started next leg down (there is also MACD confirmation for both charts). As we said last week (Gold and Miners update 24-10-14) Gold is now moving towards 1000$ and GDX towards 15$

Tuesday, October 28, 2014

Wind Energy ETF (FAN) in trouble...

Wind energy ETF (FAN) had a long run-up since 2012 from 5,5 to 13,5$.It topped out during summer 2014 and it is now in a downtrend.

Recently FAN broke down its long-term support trendline since 2012(red circle) although immediately managed to go above this trendline. The penetration of this trendline caused a lot of technical damage to the chart.

Currently, after being oversold, FAN is in a corrective uptrend.

We believe that price will move initially towards 11,2 and then finally towards 11,5 where a descending trendline, a resistance line(red line) and 55 exponential moving average converge.We suspect that FAN price will bounce there and then resume its downtrend.   

Friday, October 24, 2014

Gold and Gold Miners update

Gold is trading during the last week between 1225-1250$(as we said in last week update).We believe that next week is  important for determination of Gold downtrend momentum and maybe the level of an (at least) intermediate bottom.
If Gold manages to stay next week in the same trading range(1225-1250) then an attenuation of down pressure to gold price will probably lead to a bottom at 1100$.

If gold breaks down from the trading range then it has a good chance for an accelerated move towards 1000$.

Same picture for Gold Miners (GDX).If GDX manages to stay for another week between 20-22 then a bottom at around 17,5 is possible.

If it breaks down soon below 20$ then a move towards 15 is possible.  

Saturday, October 18, 2014

Energy sector (XLE, KOL) short-term bounce

Oil sector stocks (XLE) had a big drop (-20%) with huge volumes, breaking down from an uptrend established since 2012.

Price bounced at around 80 and now is moving towards 90+/-2, where there is a strong resistance area(red circle).There XLE will probably reverse and resume its downtrend.If it breaks below 79 then next targets will be 73 and then 64$

Coal sector stocks (KOL) are in a long time downtrend since 2011 already -70% down from their highs.

KOL after consolidating for about a year between summer 2013 and late summer 2014, broke down and bounced at aprox 15,5.We believe that it will move towards 17 and then resume its downtrend.Possible final bottom for KOL at around 13$

Monday, October 13, 2014

Gold and miners Update

Gold bounced at 1190 support and now is moving towards 1240-5.Currently between 1245-1260 (red circle) there is a significant resistance area.For bulls to have a chance they need to see gold to move above this area.We believe that for the next few days gold will move sideways between 1225-1240-5(blue rectangle).If gold breaks 1190 then 1150 and 1100 are next targets

Gold Miners(GDX) are in a similar situation.Overhead there are 2 strong declining resistance trendlines (black lines) currently at 23 and 25,5.We lean towards a sideways move for GDX for the following days between 20,5 and 22,3$.A break below 20,5 will lead price towards 19,5 and then 17,8

Friday, October 10, 2014

Turkey (TUR) at crossroads

Turkey is currently in front of multiple crossroads: Geostrategic(Kurdistan,Syria,Iraq,ISIS),  Political(Erdogan-protesters)  , Economic(Between the West and the East).This situation is reflected in the chart of turkey etf, TUR which is also at a crossroad.

Turkey (TUR) during the last 5 years is moving within a wide trading range between approx 40-70$. From mid-2011 to mid-2012 TUR made an inverted H&S formation with a measured target of around 60$, but TUR managed to overshoot this target and stop at around 75$ where was the previous high of 2010.

After the 2013 top at 75$ TUR moved again towards 40 where it found support from 2012 year-end bottom.There it reversed again towards 60$ and slide gradually at 50$ which is the current price.Again TUR seems like forming an inverted H&S(neckline at 60$) as long as it manages to stay above approx 45-47$ (where is  currently a supporting trendline from 2009 bottom) and then breaking up the descending trendline from 2013 .Additionally bulls would like to see RSI14(weekly) stay above 40.The measured target for this iH&S formation is 80$(just above the previous double top at 75$)

The inverted H&S scenario is dead if TUR moves below 45-47$.In that case TUR will probably move towards 40$

Sometime in the near future TUR will break the trading range formed since 2010.Will it be up or down?What will be the future of Turkey?Time will tell (and the charts of course...)

Thursday, October 9, 2014

Uranium and Crude update

Uranium (URA) after breaking down from its support line at 14 is now moving fast towards 11,5 where we believe that there is a good possibility for a bounce towards the descending trendline at around 13-13,5 or even a push towards 15.

Crude Oil ($WTIC) is in a clear medium-term downtrend.It didn't manage to break above 95 and is now moving towards 84 where we think it will bounce towards  88.If support at 84 fails then next target for crude will be 77,5 where there is strong support.

Thursday, September 25, 2014

Oil ready for a bounce....?

Oil ($WTIC) is moving downwards but there is a building RSI and MACD divergence(Blue lines).If oil manages to breakout of the descending trendline(black) then next target is 97,7$.Not breaking the trendline will lead oil prices towards 87,5$

Saturday, September 20, 2014

USD index 2008-now:A continuation or a reversal pattern?Use of Mass index as a guide

There is a striking similarity of the price action of USD index between 1988-1997 and 2008-now.In both cases, after a substantial decline, USD formed a trading range pattern(blue boxes).Apart from the visual similarity between these two time periods, we believe that there are important quality-technical differences up to now.


  • Time:9 years
  • Mass index signals: 4 buy signals(green arrows){buy=Mass index>26 and USD in downtrend) and 2 sell signals(red arrows){sell=Mass index>26 and USD in uptrend}The 3rd sell signal was in mid-1997 after price outbreak from the descending black line(blue circle).During the final bottom of this trading range there was a buy signal and after that an extensive USD uptrend that resulted in trading range breakout(blue circle) and a top at 120 in 2001-2002.

  • Time:6 years (not completed pattern?)
  • Mass index signals:1 buy signal at the beggining of the trading range(2008) followed by 3 sell signals (2009,2010,2013).Currently there is no buy signal and USD price is still inside the trading range.
Taking a closer look to 2008-today formation:

-USD is in a steep uptrend (RSI overbought)
-There are 2 overhead resistance trendlines(black) currently at 86 and 88-89(top of trading range in pink).
-No new buy signal from Mass index at the beggining of the current upmove
-Mass index is starting to climb gradually.

So, for the time being we suspect that USD will stall at either 86 or 88-89 possibly along with a Mass index reading of >26.After that USD might retreat towards 79 or even 72-74.
We believe that 

  • In order for USD bulls to see a sustained USD rally above 89 first we need to have a downmove toeards the lower part of trading range along with a Mass index>26(buy signal)
  • In order for USD bears to see a breakdown of USD bellow 72 we need to see first a bounce of USD price at 86 or 89 along with a sell signal from Mass index during the current upmove and an absence of a Mass index buy signal during the following downmove.  

Bullish Scenario

Bearish Scenario

Wednesday, September 17, 2014

Various asset class prices in oil barrels and What do they reveal...

-"Oil makes the world go round"?
-Oil is the most valuable commodity for the entire economic activity worldwide.In the following charts we can see the price of various asset classes in oil barrels.Oil exporters are producing wealth with which they can buy different asset classes like precious and basic metals, equities or bonds.Let us now see in terms of oil barrels which of these assets are now expensive and which of them are cheap


Gold is currently expensive.Not a buy.
Platinum is fairly priced.Not a buy.

Palladium is expensive.Maybe a sell
Basic metals
Copper is relatively expensive.Not a buy.
Equities are fairly priced.Still not expensive but near a resistance line(middle horizontal line) and maybe that's why near a correction.
F)30 year Bond price
Bonds are still cheap and in a downtrend.However bonds might be ready to break the descending trendline from 1999 and start an uptrend.That would be another buy signal for bonds.

Let us now see what it would have happened if we had traded these assets when they were cheap(buy) or expensive(sell) in terms of oil barrels. 
Not bad at all!We can see that in many cases buying or selling various asset classes based on their historical oversold or overbought condition in terms of oil barrels  is an interesting although relatively long-term market timing strategy.
We can also see that the only two asset classes that are currently on a buy signal are SPX and Bonds(bonds last buy signal in 2005, and SPX last buy signal in late 2011).