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-- Posted Thursday, 5 August 2010 | | Source: GoldSeek.com
I think the most supportive news that’s come out in recent days has to do with China allowing more banks to import and export gold as well as trade on the Shanghai Gold Exchange. The reality today is that gold is caught without much of a story. Inflation is not headline news, nor is deflation. Either event will eventually impact gold, but not right now, neither has caught enough traction to do so. Markets “look” for events and compare the actuality of what is occurring against what was expected. If inflation is expected to increase by 2%, what captures a markets attention is an actual increase in excess of that. The same occurs with a market’s expectation for deflation. Right now neither of these events has occurred enough to cause gold to rally. In fact just the opposite, since gold has sold off nearly $80 this past month. Below is a Seasonal Gold Chart produced by Moore Research Center, Inc. What I pay attention to is the tendency for gold to see prices turn up in mid to late August. Obviously seasonal studies like this take into account many factors, but what I look for is correlation between shorter periods of time and longer term ones. 
Below is a Daily Chart of December Gold. Each individual bar on the chart represents one day of trading. In “red” I have plotted the 18-Day Moving Average of Closing Prices, in “dark blue” the Swingline Study and the “black dashed line” is the Bollinger Band Study. The dark blue line on the chart below is the Swingline Study which is a technical tool I developed to help define what the current trend is, as displayed by this indicator and what the Dollar risk is defined by as the Swingline Study. At this time the Swingline Study is bullish. Rally highs are higher than previous rally highs and current break lows are higher than previous break lows. That is the definition of a downtrend. Prices are trading over the 18-Day Moving Average of Closes, which confirms the Swingline’s bullishness. Stochastics have turned up and continue to point to upside momentum. A pullback to the 18-Day Moving Average of Closes, 1190.8, looks to be where support is expected to be seen. As long as prices don’t get back under the most recent break low of 1181.5, I look for prices to trend higher.
If prices continue down, the Bollinger Band Bottom of 1171.7 looks to be the next downside target. Nothing on the chart looks bullish, but the oversold condition is cause for concern if you sell on a break in prices.
The weekly chart shows prices have rallied back to their resistance point, the 18-Week Moving Average of Closing Prices. Unlike the daily gold chart which has the Swingline Study making higher highs and higher lows, the weekly chart still has a price pattern of lower highs and lower lows. Therefore the two charts are in conflict. The seasonal chart points to momentum turning up. If prices on the weekly chart were to get over 1218.8, the last rally high, this would put the seasonal, daily and weekly charts all pointing to higher prices. I think use of mini gold contracts is called for if you wish to consider buying December Gold against the 18-Day Moving Average of Closing prices, which is currently at 1190.8. If filled I would have a stop under the last Swingline Break Low, which is currently 1181.6. Initial upside target, is the Bollinger Band Top of 1220.5 If prices were to get to 1220.5, the Swingline Study on the weekly gold chart would turn up. The Bollinger Band Top on this chart is currently 1262.5, close to the contract high for gold. It could get very interesting if that were to occur. Keep in mind that the study prices on this chart will change daily and you should adjust your entry and exit points accordingly. I will keep my subscribers advised via my twice daily oral and written updates, which you are invited to join by reading below. The key to keeping up with my trade recommendations is through my Twice Daily Written and Oral Updates. That is where I put out specific trade recommendations covering all the markets I cover with twice daily updates to them. I rarely put out specific recommendation in this Gold Report since it’s easier to use my Twice Daily Updates than this report which is limited to but once a week. If you currently do not or have not had access to my Twice Daily Oral or Written Updates, you can easily be added to our phone and e-mail list for a trial period by calling my staff at 1 866-973-2077. If you have had access and want to subscribe to the Daily Updates, simply copy and paste the following into your browser or go to: http://iraepstein.linngroup.com/delayed-trade-recommendation2/oral-update-service.html We provide both client and non client subscriptions. Prices differ as clients who have a funded trading account with us pay $25 a month for a subscription while non-clients pay $50 a month. You can read more about what the subscription by clicking here. Futures Trading Kit and Twice Daily Updates If you haven’t received our Futures Trading Kit, you should. The Kit contains access to: Live Chart Data, Charts, Quotes, Technical Chart Studies, Videos that talk about trading techniques, money management tools, access to our Daily Market Research along with our proprietary electronic trading booklets and much more. Best of all, it’s FREE to experience. Simply call to receive your of our Futures Trading Kit. It’s your FREE Trial to our market information and other trading tools. Just call 1-866-973-2077. Disclaimer: This publication is strictly the opinion of its writer and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is taken from sources believed to be reliable, but is in no way guaranteed. Chart data is courtesy of LGP-IraCharts. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures and Options on Futures trading involve risk. In no event should the content of this market letter be construed as an express or implied promise, guarantee or implication by or from The Ira Epstein Division of The Linn Group, Inc or The Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are not indicative of future performance.
-- Posted Thursday, 5 August 2010 | Digg This Article | Source: GoldSeek.com
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