marceau

Anyway, on gold I didn't like what I saw today yet again. The volume just isn't where it needs to be and I still see a firm downtrend. Even the rally towards the NY close wasn't very convincing, at no stage did I think it was going to break through $873 and guess what, it didn't. The only consolation for me was that the steady uptrend, violent selloff routine appears to be coming back into fashion, more in line with the upmoves in a bull market than the recent downtrend action. I still have a problem with gold relying on oil to drag it up by its bootlaces, that's extremely dangerous thinking in my opinion and if gold really is being saved by oil at the moment it doesn't bode well for it's prospects during the next oil selloff. I'm assuming the ECB won't drop any bombshells this week so all I can see happening for a while is more of the same insane bullishness for stocks and insane bearishness for gold.

Don't lose faith, especially not now we are so close to the bottom. Why sell up and move on AFTER gold has taken a battering, that's just what the manipulators want you to do, go back to their paper. For what it's worth I haven't lost faith in gold one bit. Yes, I think it's due another fall or two, but that's only because the markets have taken too much prozac and are living in lala land (yet again). If you start cost averaging in today and give it 6 months I'm sure you'll be more than happy with the results (and have a load of assets which still have much further to rise). I just can't see gold dropping below the 200dma, and that's climbing steadily as I write. Within a few weeks it will have risen to the $850 level, not too far from where we are today. I have my core position already and I'm not even thinking about selling it, I just want to add some more close to the bottom and have some fun trading along the way. I'll admit that this strategy isn't for everybody, so if you don't want risk I'd highly recommend drip feeding purchases over the next few months or building a pile of cash with which to buy. The main thing is not to sell what you already have, if you do, you lose, there's no other way to put it. Keep the faith dude.

I have to admit it was nice action in gold today, but as I've said it still has an awful lot of work to do before the risk of another big selloff is put to bed. I'm slightly disappointed that we didn't pop upwards when gold broke through $883, I was really expecting that to be the moment that the shorts finally started to let go. I suppose that's part of the problem at the moment, the shorts have so many lines of defence that they are happy to hold for longer. For the record I'm still not convinced, there was much better volume today by the look of things, but it looked to me like it only came in after the bulk of the move had already been made. When the volume did arrive, it didn't do much for the price considering where we were on the charts (we could have easily popped up towards $900 if they'd got any real traction), which means big selling volume kept a lid on those longs. I still wouldn't buy here to be honest. I think I'll wait and see where the next bout of selling takes us. Looks like I'm still in Grinch mode for gold then.

Has the trend really changed? All I see is one day's rise after several days of falls. Has sentiment really changed? If your talking about the newsletter writers or the small 'dumb money' traders they flip flop more often than a high jumper at the olympics. I'm not saying that the bottom isn't in, in fact if you re-read my posts today I've actually said we may have already seen it. But I like to go on the basics, one of which is not to buy strength and most will not have had that opportunity today because the market gapped up on the open. I'm sure the painful truth will be unavoidable for the shorts eventually, but eventually could be a long way away based on current market mentality. I think calling a change in sentiment after one day's rise could be a bit premature, gold has an awful lot of work to do before we erase the danger of going below $850 again.

No I'm not convinced at all. We were due a bounce and got one, but it was all a bit weak in my book and far too much of it happened outside NY hours. That gap is just too big and too obvious to have been missed by the shorts, they will attempt to fill it and I'd say the smarter players were just sat on the sidelines today waiting for a rally to create a short entry point. I certainly wouldn't be going long now from a trader's perspective (accumulators can follow a different set of rules). I like Cuthbert's (sounds weird calling you that Frizz) views on future price action and pretty much agree with them from a trading point of view. I still think the rallies are going to get sold for the time being, but an attempt (and failure) to break the 200dma could change all of that. The question is how high the 200dma has climbed by the time we test it. Edit: I also think the recovery, when it comes, will be swifter than previous ones. I can't see the gold market dithering over anything for too long in the current climate. It will either be gold positive or gold negative, each side will bring violent moves and mark the return of gold's infamous volatility (the $20-30 swings will turn into $50-100 swings). The market is on life support at the moment, and traders have started to turn the slightest piece of news into proof of life or death, I can only see this intensifying as time goes on.

Agreed, problem is that the second this rally runs out of steam we'll be back down to fill that gap in the low $850s, and I'd say the balance of probability, to my mind, will take us even lower than that. I said last week that I was expecting a $20 or so bounce from $850 and after that a retest of the lows. So far it looks like it's playing out, but if we can move decisively over $870 and stay there then I may change my mind.

Although gold has been climbing nicely so far today I can't help but feel that the UK bank holiday has removed a lot of volume and (based on London's generally negative bias) selling pressure from the last 5 hours of trading. NY will choose the direction from here and you get no prize for guessing which direction that will be. Overall I'm sure $850 wasn't far from the bottom, but I think we'll get another attempt to break those lows at $845 before we start to undo the damage this correction has done.

I'm lining up to add to my core position below $910. The only thing that concerns me is the speed with which we've fallen so far. I'm almost 100% sure we'll get down to $905 over the next few days, even if it is only for a few seconds, before the journey back to the old highs and beyond begins again. Doesn't stop me feeling nervous about buying though.

What a complete joke, it's like something from the USSR. The more they try and rig things the worse it will get for them in the end. A move like this will simply accelerate the wealth drain from the US to the east and any western nations not stupid enough to collude with the scheme (sadly, I don't think this will include the UK, Canada, NZ etc). How deluded and arrogant must the US authorities be if they think they can get away with this. The rest of the world will just carry on without them. If there is even a shred of truth in this then the US has officially transitioned into lala land.

This really doesn't look good. The battle is on to take out the support levels below $920 and have a go at $900. Based on what I've seen so far, it wouldn't surprise me to see them at least get a chance at it. Silver seems to think it's found a bottom and has bounced, but I'm not so sure it'll hold for any length of time.

$920 retaken, I hope it holds for a little longer. If it gets breached again too quickly we'll drop to major support at $905/6 for sure.

Not just you, I'm showing ET as well.

This level is good support from a few days ago. I don't think it will hold, but we may get some clues from how quickly we drop through $920. There is strong support around $915 and $905 before we even get to $900. If they are going to have a serious attempt at $900, they'll need to take $920 quickly. Edit: Which they just did. Bugger.

Looks like we got the capitulation. I'm not sure we're done yet. Could we get a test of $900 today? We haven't really bounced yet either, so we could have further to go. I haven't seen the volume but I'd imagine it's going to be quite large and sustained. Time for caution methinks.

Not a smackdown today but something potentially worse - a slow unwind. There could be a capitulation drop at the end of this so watch out. Anyone got info on the volume?

Looks like we're straying back towards the key 12000 level on the DOW. What will be pulled out of the bag to save it this time? Makes a mockery of those who say that the Fed managed to avert a crisis through its actions of the last few months (and there are plenty of them about). They clearly had no idea what the problem actually was, let alone know what needed to be done to fix it. Why is everyone so keen to declare turning points? It's like those clowns declaring the 'end of history' when the Soviet Union collapsed, as if it meant the western powers would rule unchallenged for all eternity, and the lessons of history were irrelevant. What breathtaking arrogance. They drew their conclusions far too quickly, superficially and complacently, something I see again and again in all spheres of life. They fail to appreciate the nature of a situation even in terms of their own history, let alone the history of other nations and civilisations. I suppose we all have a tendency to overestimate our own importance in the grand scheme of things, so it's only natural to believe that your era or predicament really is different to ones that have gone before. What stuns me is that there are many examples similar to our current crisis to be found within the last 100 years alone, surely it's not asking too much for someone in the mainstream to see the bigger picture? Until they do, they'll keep drawing premature conclusions and they'll keep looking like utter fools when those predictions are smashed. It would be funny if the outcome wasn't going to be so serious. Anyway, rant over, back to the DOW. Will more rate cuts be enough to save it?

I wonder what we'll get out of the US today? My gut tells me it's going to be another sell-off attempt. The question is, how far will it get? I just can't get excited about those lease rates. It may mean something, but I seriously doubt it gives us any information from which to derive a trading advantage. If you can't interpret it, what good does it do you?

Well said. Take the handbags outside gentlemen.

Nice summary Pluto. My experience of lease rates is that they are next to useless as an indicator for gold price moves. They aren't consistent enough at predicting either the direction or size of a move, so I've mainly discounted them. The size of this shift is interesting, though, and it could well have an impact on the gold price. The problem is I'm not sure any of us will be able to determine what that impact will be in advance. As for large moves in the gold price coming, you don't have to be a genius to predict that at the moment, we're in the middle of a correction!

Silver seems to have major resistance at $18. Let's see if it can break through decisively this time.

Oh, and it's worth me saying that I still think we're going to get a retest of $900 over the next few weeks. I just don't think it will be today.

It means buying a gold contract/cfd/spreadbet/option near a support level with a stoploss placed either at or just below the support. This means that the downside risk is minimised by the presence of the support level (in this case $920 with additional support around $915) while the upside is good if the support holds and we get a bounce. Key to this has been today's volume, which was thin to start with and will have been getting thinner as the gold price moves down (as shorts take profits and hop out of the market). Less volume means less power behind the moves and suggests that the price action is being driven by smaller traders rather than the big players (this is not always the case as some of the big players purposefully disguise their moves in order to build positions on the quiet). It also means the move is less likely to stick or be followed up with further selling. Playing support/resistance levels is key to timing entries, whether your a frequent trader or looking to get into a long term position for buy and hold. I'm not trading with any frequency at the moment, but I liked the risk/reward of this position so was considering going long. I didn't do it in the end, but by the look of things I should have, as gold has bounced straight back towards $930 and I could have exited the trade for a quick profit or stayed in for more upside. I'm not massively into Technical Analysis, but I can't deny that it works frequently and can do wonders to minimise the risk of buying in at the wrong time. I'd recommend learning the basics, I believe there is a thread on this somewhere on this forum so that would be a good place to start. The key to TA is keeping things simple, looking at things in too much depth often means you can't see the wood for the trees. A sound grasp of the underlying fundamentals of markets and companies is much more important in my opinion.

It just broke down past $926 though. That should put a bit more life into the shorts but I can't see them getting much further. I may put in a small long here with a very tight stop.

I would guess that many gold shorts are hoping for another rout today. As such I'd imagine the short position at the moment is very large. If gold manages to hold on we could bounce straight back through $950 as the shorts close. I still think we'll get a big shakeout before we move higher, but I'm not convinced that this will be it, as it all seems a bit too obvious. As Bubb says, the next few hours are key.

There must be something huge sat on silver at the moment, gold bounced off $926 pretty convincingly, but silver is still near its days low below $18.