johnatan hammer's  Instablog

johnatan hammer
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trading stocks, currencies and commodities for more than 10 years. allways happy to learn new things and anyone i meet can be a teacher. i love to use technical analysis as a primary tool for investments or trades.
  • Gold Chose Down 0 comments
    Apr 16, 2013 4:22 AM

    Two weeks ago I read a recommendation from an analyst of Oppenheimer who argued (with common sense)that in light of a rising inflation around the world due to quantitative easing in many currencies as well as the expected interest rate increase next year the price of gold should start to change trend.

    This is the main problem in trading in commodities or currencies - just when you think you understand what affects the price you find it is no longer relevant.
    Gold started the trading week as he breaks 1550 support level down, completing a double top pattern (it was very tempting to use the triangle but I think the double top is more appropriate when using a monthly), and breaks the average 21 M.A. down.
    I think there are two main reasons for the sharp decline in price as manifested Aprils monthly candle
    1) The first reason for the sharp drop down to the $ 1,450 we see after breaking the $ 1,500 is the action of an automated orders- commands stop loss / stop-limit guided to close the position if the support level will be broken down. basically in only a few minutes we had thousands of sellers in the market which made the price of gold drop sharply down
    2) The second reason is a derivative of the first reason, about 80% of trading on the Stock Exchange is today is done by trading machines - computers connected to a bank account and have the ability to buy and sell freely and almost unlimited.
    When we notice the movement that seems to us irrational can be assumed that the Battle "between the number of algorithms try to get the best price.
    Due at least in the short term there is a high probability of correction downward trend upward.
    Sure medium / long I think there is a high probability of 50% correct upward trend beginning with the target in the $ 1,300.

    (click to enlarge)

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