Sum up of Gold and Intermarket analysis of April-2019
April 2019 is coming to an end so I want to sum up the current market situation so far.
From the 4 assets classes chart below...
Two asset classes are approaching resistance.
The currency
DXY has rally last week and now is approaching the resistance.
Also,
SPY is almost at its all time high and long term resistance at around 3000 (also a psychological point).
The opposite is seen in commodity and bonds
TRJEFFCRB has broken through its long term resistance and now is on the way to test the broken trend line.
We can see the same situation here for 10 year T-Note CBOE:TNX
Now, let's look at S&P500 here.
We are almost at the all time high which is also a long term resistance and 2.618 fib of 2009 decline.
Are we going to rip right through the overhead supply?
Or will the market reverse like when the exact same situation that happened in 2000 when we reach 2.618 fib of 1998 decline?
Only time will tell.
But by the behaviour of Bonds and Commodity that is evident on the chart, it looks like investors are concerned and starting to move into these assets.
Since we see a break out in commodity, let's talk about GoldGLD
Relative performance of Gold vs Dollar
It's very clear that we are on the trading range here and soon we will see a break out in some direction. Right now we are above 200 days MA.
Relative performance of Gold and S&P500
Something is going on here!
We can see that this is the first time since 2012 that we finally see the yellow metal outperform the S&P500. If the relative performance can stand above the broken resistance, and at the same time, when currency and S&P500 are approaching key resistance, we may see a significant move to the upside.
Only time will tell and I think it will be soon.
Let's go back to 2007.
I can see the similarity here.
In term of absolute performance of GOLD
We have, again, broke down from support and a head and shoulder pattern at 1290 usd. In upcoming days we might see a rebound to test the neck line at 1290.
It is a weird looking head and shoulder pattern, and when everyone thinks it is a crystal clear, textbook H&S (which appear to be so given the volume profile where people are waiting to sell at rebound to the neck line at 1290 and waiting to buy at 1230 which is a target of H&S), it could fail miserably.
Clear pattern often fail! So be careful!
But, what if it is not a head and shoulder like everybody think?
Let's look at alternative scenario below.
This is a scenario that could happen given the structure of the supposed falling wedge here, and also an elliot wave count.
It is always good to have alternative plan in mind and be flexible in trading.
I think FOMC meeting next month would give a clearer movement direction. So, let's see what will happen.
From the 4 assets classes chart below...
Two asset classes are approaching resistance.
The currency
DXY has rally last week and now is approaching the resistance.Also,
SPY is almost at its all time high and long term resistance at around 3000 (also a psychological point).The opposite is seen in commodity and bonds
TRJEFFCRB has broken through its long term resistance and now is on the way to test the broken trend line.We can see the same situation here for 10 year T-Note CBOE:TNX
Now, let's look at S&P500 here.
We are almost at the all time high which is also a long term resistance and 2.618 fib of 2009 decline.
Are we going to rip right through the overhead supply?
Or will the market reverse like when the exact same situation that happened in 2000 when we reach 2.618 fib of 1998 decline?
Only time will tell.
But by the behaviour of Bonds and Commodity that is evident on the chart, it looks like investors are concerned and starting to move into these assets.
Since we see a break out in commodity, let's talk about Gold
GLDRelative performance of Gold vs Dollar
It's very clear that we are on the trading range here and soon we will see a break out in some direction. Right now we are above 200 days MA.
Relative performance of Gold and S&P500
Something is going on here!
We can see that this is the first time since 2012 that we finally see the yellow metal outperform the S&P500. If the relative performance can stand above the broken resistance, and at the same time, when currency and S&P500 are approaching key resistance, we may see a significant move to the upside.
Only time will tell and I think it will be soon.
Let's go back to 2007.
I can see the similarity here.
In term of absolute performance of GOLD
We have, again, broke down from support and a head and shoulder pattern at 1290 usd. In upcoming days we might see a rebound to test the neck line at 1290.
It is a weird looking head and shoulder pattern, and when everyone thinks it is a crystal clear, textbook H&S (which appear to be so given the volume profile where people are waiting to sell at rebound to the neck line at 1290 and waiting to buy at 1230 which is a target of H&S), it could fail miserably.
Clear pattern often fail! So be careful!
But, what if it is not a head and shoulder like everybody think?
Let's look at alternative scenario below.
This is a scenario that could happen given the structure of the supposed falling wedge here, and also an elliot wave count.
It is always good to have alternative plan in mind and be flexible in trading.
I think FOMC meeting next month would give a clearer movement direction. So, let's see what will happen.
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