BarroMetrics Views: A Question on Gold 2
Gold is in an interesting position.
The below normal range and volume on Jan 14 was to be expected given the context to the CPI tonight. By that I mean, there does not appear to be a clear bullish or bearish sentiment among the participants. In that situation, we tend not to see large moves ahead of important numbers.
Even so, the benchmarks in Gold appear clear.
I have attached a Daily chart (Figure 1) to provide a context to the 60 minutes analysis:
- After the breakout at 1040, Gold rallied to 1230.
- We then saw a 46% retracement to 1080 (I was looking for a pullback to the 1040 to 1025 level).
- However once Gold broke above the 50% retracement of the correction on Jan 11, I changed my assumptions and assumed that the low at 1080 marked the end of the correction. The more time we spend above 1080, the more likely it is we’ll see a test of 1230 before (or if ) we see a test of 1080.
Figure 2 is a 60 minute chart.
It shows a potential H&S continuation of the down move. The black trendline is the neckline. Acceptance below the neckline projects a target to 1075.
To negate the H&S pattern, we need to see acceptance above 1146. Such acceptance suggests Gold is on track to test 1230.
My stop on my long gold positions is currently below the 1112. Since acceptance below the neckline projects a target to below my stop, I am creating a structural stop below the neckline: if there is a bearish conviction 60-minute bar below the neckline and that bar is accompanied by Delta selling volume, I will exit at market.
The price stop below 1112 will of course remain.
FIGURE 1 Gold 18-day
FIGURE 2 Gold 60-minute