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Gold - I'm calling the top
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Gold - I'm calling the top

  #21 (permalink)
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yeah I looked at gold in other ccy's too, but can't figure out how to post it on here from a chart and too lazy to try and find ninjatrader indicator to do it

but as for new highs, like I said in my explanatory post, fresh highs doesn't change my view - gold could go to $2,000, as long as the price action looks like it does now, with explosive moves higher, exhaustion gaps and so on, I continue to favour the downside. If we get some consolidation up here, and establish a new value range, then that would make my hypothesis wrong... but, until then, my view is that it is going to crack soon, and when it does it won't hang about.

My plan for this trade would be to take several pops at it if you need to from whatever entry setup you prefer. Keep stops very tight and be intelligent in their placement - by this I mean keep them below the recent highs, not above. The trade is only valid while gold continues this exponential move higher (see the Crude example).

(and, like I said, I'm not trading this. I have no edge in fundamentals or the Gold market, my edge is in another asset class using a totally different strategy. I know how hard I have to work to maintain that edge, so I am under no illusions of grandeur that by reading a few textbooks and bloomberg articles I have any edge in fundamental analysis or commodity markets. This is just an observation of mine, that the action in Gold resembles the action in other bubbles right before they have popped)

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  #22 (permalink)
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will be interesting to see how things pan out ... they raised margin requirements and storage fees trying to force people out I guess


It’s Really Easy To Trade Gold (in Hindsight)

Gold Drops From Record Above $1,800 an Ounce as CME Raises Futures Margins

Gold Drops From Record Above $1,800 an Ounce as CME Raises Futures Margins - Bloomberg

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  #23 (permalink)
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Picking a top for profit taking is a whole different ballgame than picking a top for counter trend entry.

With Gold, there's so many fundamentals that can ruin your day (reference the margin modification). Fluctuations in the dollar, fluctuations in the equity markets, fluctuations in demand for actual Gold via electronics, fluctuations in the risk free rate, etc.

All I know is when it's time to bail, Gold will burst and crash like crazy. When people start bailing, it's going to catch fire like a dried out Christmas tree.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #24 (permalink)
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just some general commentary...

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In another thread about HH's and LL's, and if they were appropriate for tracking price action, I said the following:


cpi65 View Post
here's a tip;

Under normal market conditions, using HH's / HL's / LL's / LH's in the conventional sense is going to cause you more problems than it solves. In ordinary conditions, try looking for unconventional price action as a framework for your trades. A simple explanation behind this is that swing highs/lows, and what type of orders will be resting there (if any), are easy to spot - and order clusters act like a magnet for price if underlying conditions are static.

In extra-ordinary market conditions, like for example these past two days, conventional price action can work very well. An even simpler explanation behind this is that when the sh!t is hitting the fan, the natural reaction of most short term speculators is to sit on the sidelines... "it's too choppy", or "I'll wait until the reaction is over", whatever. In these circumstances, conventional price action often yields excellent rewards.


so:

ordinary conditions => unconventional price action
extraordinary conditions => conventional price action

hth

And this might give me an opportunity to explain by example. In the chart above, I have marked out the size of two pairs of swings up, and their pullbacks. What I would like to draw your attention to here is that the second swing up is only approximately 60% [fib extention] of the first, and the pullback is larger than the first. This is what you would expect in "conventional" price action, perhaps with teh next swing up peaking lower than the overall top and setting the stage for a HH/HL -> LH/LL transition (or, if the mood takes you, a head and shoulders pattern). Under "normal" market circumstances, this type of action is likely to cause you more problems than it solves, as the conventional order cluster that such action generates is plain for all to see (market order clusters act as a magnet for price). However, under "extraordinary" market conditions, the lack of participation through trepidation can often mean that these convention price action clues are in their element.

However, there is always a counter argument, and I present an alternative it here:

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With the whole world expecting Gold to skyrocket, the price action illustrated by the two green arrown is likely attract fresh long positions, with their stops quite obviously placed. A press below such levels is what I would expect under normal market conditions - nothing in the markets is ever black or white :-)


Lastly, I would remind anyone following the thread to look at the monthy Gold chart posted earlier on... the end of this mania phase will not be triggered by action on the hourly alone, what to look for is the action on a lower timeframe trigger a similar event on a larger timeframe, creating a domino effect. That's why it takes more than one go to nail the top.

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  #25 (permalink)
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As Gold Briefly Hits $1,800, Traders Fear Party Is Ending

As gold topped a record $1800 on Wednesday, traders that are long gold (CEC:Commodities Exchange Centre: GCCV1) began to get nervous that they were behind a trade that may not have any potential new buyers left. After all, a trade only keeps working if you can find someone else who wants that particularly security or commodity at a higher price.


First let's look at the cold data.
On Aug. 2, holding by large gold speculators-namely hedge funds-hit "readings that are the highest ever in our records," stated a Bank of America Merrill Lynch analysis of CFTC data.
The $40.6 billion notional value of gold contracts held by speculators was up from $38.1 billion a week earlier, according to the Merrill Lynch number crunching.
But more importantly, the chatter on trading floors is about a fear that the market turmoil lately could trigger large hedge funds to raise money by selling one of the few things working for them: gold.
Take John Paulson, the legendary housing market short. His Paulson Advantage Plus Fund is down more than 31 percent this year because of sour bets on financials like Bank of America (NYSE:BAC - News). Yet his firm still counts gold investments amongst its largest holdings.


"The risk to the latest bull leg being kicked out is redemptions at large hedge funds that have a significant stake in gold," said Brian Kelly of Brian Kelly Capital, who has sold 90 percent of his gold position. "The dreaded forced selling."
"Truth is no one else knows where else to put their money, but as soon as a Soros-like figure exits his massive gold position, there will be a huge panic sell-off," said a trader at one of the more sizeable commodity trading firms who wished to remain anonymous. "Just in terms of simple mean reversion, it looks like we could easily snap back to the 1550-1600 level at the blink of an eye."
One massive bullish force and potential perpetual buyer of gold are central banks. With almost every country in the world actively trying to devalue their own currency in order to lift asset prices, gold, in effect, has become the only real store of value left.


"There is still the chance of more quantitative easing at a time when the ECB is doing its own form of QE, the BOE is likely to restart its program and when the Bank of Japan and the Swiss National Bank are intervening to cap their currencies," wrote David Rosenberg, chief economist and strategist with Gluskin Sheff, in a note Wednesday. "That leaves gold in a full-fledged bull market as its safe-haven status is enhanced even more, since it cannot be manipulated by governments."
But gold fell the most since June on Thursday as jittery investors took profits and stocks rebounded after investors found valuations following the recent equity slaughter attractive. Gold, however, is still less than 2 percent from its record settle of $1781.30.
"It's a rock," said James Altucher, financial author and blogger at 'The Altucher Confidential.' "The world's economy is going to move beyond a rush to the latest fad currency and find real companies to invest in."

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  #26 (permalink)
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Jeffrey Cooper: Geometry Of Gold Cycles Points To A Top | Markets | Minyanville.com

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  #27 (permalink)
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@kbit

hi mate... there have been a few rumors doing the rounds about Gold recently - Paulson (though why anyone cares that his fund is down 31% I don't know - really what difference does it make? One good trade and he's nostradamus?!)... profit taking to meet margin calls in other trades, SocGen (lol) etc... personally, I ignore them all, especially what is written in the financial press, it's 98% retrospective, 1% error and 1% genuine insight.

@GridKing

now, honestly, I don't know where to start with that. I can remember maybe the 1st 15 elements of the periodic table, does that count?

To be honest, both of those references, and all the other chatter about Gold highs and being toppish, is making me think that another squeeze higher is more likely than imminent collapse.

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  #28 (permalink)
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cpi65 View Post
@kbit

hi mate... there have been a few rumors doing the rounds about Gold recently - Paulson (though why anyone cares that his fund is down 31% I don't know - really what difference does it make? One good trade and he's nostradamus?!)... profit taking to meet margin calls in other trades, SocGen (lol) etc... personally, I ignore them all, especially what is written in the financial press, it's 98% retrospective, 1% error and 1% genuine insight.

@GridKing

now, honestly, I don't know where to start with that. I can remember maybe the 1st 15 elements of the periodic table, does that count?

To be honest, both of those references, and all the other chatter about Gold highs and being toppish, is making me think that another squeeze higher is more likely than imminent collapse.



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  #29 (permalink)
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sorry mate, lost me on that one too

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  #30 (permalink)
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a gentle update;

the HL-> HH -> LL -> LH (or head and shoulders) pattern did emerge, but the action on the break was not hard and fast, and if you shorted either setup your trades would be left wanting - it obviously isn't a high performence trade. With that in mind, I expect Gold to go Higher before it goes lower. In addition, the action on the daily chart looks like a textbook spoof - downside break of a bearish engulphing setup, before trapping new shorts and pressing higher for more position liquidation.

I intended to annotate charts over the weekend, but couldn't find the time. Bottom line is that Gold is still a great short, but not yet. A contributory factor has been that the market as a whole (specifically, SPX) has seen sense and is reclaiming some of the panic losses (this was on the cards by Thursday last week), and markets are now nearer more "ordinary" rather than "extraordinary". Remember it's this latter phase thats offers the best contrarion trades.

will update when I see something noteworthy, if and when I can.

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