By FX Empire.com
Economic Events: (GMT)
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Feb. 06 |
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Feb. 07 |
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Feb. 08 |
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Feb. 09 |
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Feb. 10 |
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Gold Weekly Fundamental Analysis February 6-10, 2012, Forecast
Historical
High: 1916.20
Low: 1321.10
Rule:
One of the simplest ways for traders or investors to take part of this intense gold up trend is to let price action be their guide. In taking a look at the daily chart of gold, we can see numerous price action strategies that occurred in the context of this trending market that nearly all worked out as great entry points. Notice in this chart below how accurate price action can be and the frequency with which it provides high probability entry signals. By no means are we suggesting traders should have or could have taken all of these entries. But when you combine such high probability entry strategies with a sound money management plan, including a profit taking strategy, it would be very hard too not profit consistently in strongly trending markets like we are currently seeing in gold.
Gold is a bull force to be reckoned with right now, when a market is in a strong trend there will naturally be many great entry points. Price action setups can provide a plethora of accurate and non-lagging entries into such trends.
o Human discretion plays a big role in trading success, despite what internet marketers want you to believe, rigid trading “robot” and lagging indicator systems will never make you a consistently profitable trader. You need to get an education in price dynamics and “naked” price chart reading to develop your discretionary trading skills.
o There is simply no need to cloud up your charts with lagging indicators when mastering a few simple price action setups is much more accurate, effective, efficient, and stress free.
o When fundamental AND technical forces are in alignment, as with the current situation in gold, price action traders have an extremely valuable opportunity because trading with price action allows for much more accurate entries than other methods as well as providing traders with a “set and forget” style of trading when used in combination with simple risk to reward scenarios.
Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, wealthy investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets. Gold prices are on the rise again. You now buy three gold contracts. By the end of the week, each contract is up by 100 points. You make a cool $3,000 when you sell the three contracts. This way, you complete your third trade in a series of four trades.
This completes the third trade in the series of four trades. Now, you are ready for the fourth trade. You watch the market. It is moving up again. You enter with four contracts this time. You wait for a few days and the market is up by 50 points. You sell all the four contracts and make a profit of $2,000. Your total profit in this series of four trades is $6,500. This profit you made in just a matter of few weeks which is not bad. After you complete a series of four trades, you remove the profit from your account. Now, you can start all over again with a new series of four trades. The first trade in this series of four trades will always be with one contract.
This is a very simple gold trading strategy that depends on pyramiding your position with a series of four trades and removing all the profit from your account at the end of these four trades. With practice, you will find this gold trading strategy very simple and easy to implement.
- Gold reacts to uncertainity in the markets
- A drop in major currencies can indicate a run into gold.
- Remember investors tend to take profit from gold so watch for trading opportunties when investors are taking profits, not moving out of the markets.
Analysis and Recommendations:
Gold closed the week at 1728.25 after peaking at 1762.45 earlier in the week. Gold dropped like a lead balloon on Friday as the USD soared on economic news. As the US revealed that it was definitely in a recovery mode, investors risk appetite climbed moving from the safe haven of Gold, after 4 days of soaring prices. Gold closed the week up. The losses for the precious metal on Friday came after the U.S. Labor Department reported that 243,000 jobs were added in January and the unemployment rate dipped to 8.3%. This week we were looking for resistance at about $1,763-$1,765, and this morning gold bounced right off that hard resistance.
The markets all week have been reacting only to news and economic reports. US jobs data and unemployment figures surprised the market this week, adding 243k jobs and unemployment dropping to 8.3%. Overall this was a strong week for the US and the greenback.
Greece is still not resolved and the special meeting of the EU that was scheduled for Monday to review the Greek proposal has been cancelled.
There are several problems, which include Germany wanting to have more control over the Greek budget in the future, since it will be mostly German taxpayers who will be funding the bailout. Also the Greek politicians are not supportive of the addition austerity measures, facing elections in April; many political leaders are more concerned with re-election that demands from the EU and IMF.
Gold should hold here until there is more clarity on Greece and Portugal.
Strength:
1) US- Jan Payroll gains show big upside surprise of 243k, about 100k more than expected, unemployment rate falls to 8.3%
2) US- ISM services index rises to best since Feb ’11
3) US-ISM manufacturing up 1 pt but touch less than expected
4) US -Jan vehicle sales at 14.1mm is best since clunker month in Aug ’09 and the most since May ’08 before that
5) US – savings rate rises to 4% from 3.5%
6) US -Initial Jobless Claims fall 12k
7) Germany -unemployed fall again, rate at 6.7%
UK- manufacturing and services PMI figures both rise
9) Eurozone- manufacturing and services PMI in line with initial
10) Portuguese bond yields fall from highs, Italian yields lower too with Spain flat
11)China – manufacturing PMI stays above 50, Taiwan and South Korea rise but remain below 50
12) India – manufacturing and services PMI both jump
Weakness:
1) US- Jan Consumer Confidence falls almost 4 pts to 61.1, well below expectations of 68 as labor market answers soften and those that plan to buy a home falls to lowest since Aug and those that plan to buy a car down at lowest since Oct ’10
2) US -CS home price index falls to lowest since Feb ’03
3) US -MBA said refi’s fell 3.6% and purchase apps were down 1.7%
4) Canada – Jan jobs report disappoints
5) China – PMI services index falls to 52.9 from 56, the 2nd lowest since Feb ’11
6) Taiwan -economy in a recession after Q4 contraction q/o/q
7) Greek- debt discussions for another week are hours away from wrapping up, becoming a nightmare
Eurozone -Amount of LTRO funds from ECB continue to be redeposited with the ECB
Feb 07 09:00 Netherlands Eur 5.0bn Jul 2022 DSL
Feb 07 10:10 Greece 6M T-bill auction
Feb 07 10.30 UK Auctions 1.75% 2017 conventional Gilt
Feb 07 15:30 UK Details gilt auction on Feb 16
Feb 07 18:00 US Auctions 3Y Notes
Feb 08 10:10 Sweden Nominal bond auction
Feb 08 10:30 Germany Eur 4.0bn Feb 2017 Bobl
Feb 08 10:30 Swiss Bond auction
Feb 08 16:30 Italy Details BOT auction on Feb 13
Feb 08 18:00 US Auctions 10Y Notes
Feb 09 10:10 Sweden Sek 0.75bn I/L bond auction
Feb 09 15:30 Sweden Details I/L bond auction on Mar 23
Feb 09 16:00 US Announces auctions of 30Y TIPS on Feb 16
Feb 09 16:30 Italy Details BTP/CCTeu auction on Feb 14
Feb 09 18:00 Italy Auctions 30Y Bonds
Feb 10 11:00 Belgium OLO auction
Originally posted here
