ker.nulov@gmail...'s  Instablog

Quick introduction: Working on the end of gold bull market, long story here


Yesterday Gold made a 'doji' type candle on the spot price. This is a sign of possible short term top. Today a close lower will confirm it.


We can see that uptrend channel is weakening, we are below the median line, so another test to the lower line is expected. It seems that a week more is needed to start a good downtrend. The watch-out for bear scenario cancellation is breaking above the new downtrend channel which seems to be in the process of definition.

Have a nice day.





Disclosure: Short gold and silver

 Few points on long term DOW/GOLD ratio:

• 1. We have well defined downtrend channel. At this time it is testing its median line. The break above median line suggest we are going to test the other line, i.e go higher on DOW/GOLD ratio. My target is 200 MA
• 2. We have an expanding wedge there. Expanding wedges are a good continuation patterns for more stronger waves, so this wedge suggests the DOW/GOLD has to go to 2 or 1. However expanding wedges not always work like this, they also work as a trend change pattern.
• 3. Indicators RSI and Stochastic are in 'oversold' state
• 4. The 200 MA has not been touched since 2002. That's a big issue.

Summary: 3 bullish points against 1 bearish (expanding wedge) out of 4 in total.

My take medium term is that we are going to test the 200 MA, but the 200MA is located above the downtrend channel, so in order to test it, we will have to break above its upper line. Breaking above its upper line opens the door to the next parallel channel. Being in parallel channel suggests we are going to at least test the resistance line at 15.0 .......... so, wherever you look gold has to do a long term correction



Disclosure: Short gold and silver

For those who follow Europe fundamentals it was not a surprise when they saw the euro collapse from 1.60 to 1.22 in 2008. Most of us knew they suffer from the same diseases that US does. However when market started another rally from the bottom towards 1.51, it was going higher and higher and it seemed to be unstoppable.... That, my friends, is a great demonstration of how many technical traders are there and who don't care about fundamentals in any way.

To show you how low those traders can beat the Euro, i have made this approximate analysis based on channels and elliot wave theory.

Lets see.



The top EUR/USD made in 2008 can be considered 'Long term high', and it means it could be 10 years from now. The market has defined for us a long term channel which i call 'Primary Downtrend Channel'. Knowing the channel boundaries and channel dimensions we project the downside target and it is calculated at around 0.80 - 0.85. We have a median line at this channel, which creates 2 subchannels. My take right now is that this month, EUR/USD is going to break into the lower subchannel. Then we will have 2 months of slow downside. After that the 1.15 level should be tested. (Market can't go down for long without testing broken support) This will create volatility enough to reach 1.15 and from that i expect another leg down to conclude this third wave of selling.

The chart also fits Elliot Wave Theory pretty well. I have labeled the waves so you can see my count. Right now we are in a third wave, third waves are usually the strongest, and have little retracements, this is what we have witnessing so far. Also, being EUR/USD one of the most actively traded instruments, it makes it difficult to do large retracement, like other currency pair with low volume can allow itself.

Have a nice trading.




Disclosure: Long USD/CAD