Gold : More of Chakravuyh than Arjuna's Arrow !
Updated
Our long pending analysis and the most sought analysis is Gold. True, people are worried at uncertain times and economic scenario's around them, so they want to analyse whether Gold will be safe security for part of their investments. Before we go into analyzing the Xauusd, Be clear about the fact we are building a case with our analysis like Chakravuya considering various economic factors, its not a straight arrow from Arjuna aimed at Bird's Eye. So we are analyzing with Global scenario's,News Events, Fed rate hikes etc.
What do we see in the chart above ? Broadening Wedge Ascending Pattern which usually breaks to downside, rarely it moves up. Check out My posts on AUDUSD and USDCAD you will know how this pattern worked in the past. For sample, I'm attaching Aussie, for cad post check in my public profile.
Above chart is not one time instance, I can show you 5 charts for this broadening wedge working in same manner breaking downside and moving up after the breakout. So Gold is expected to give the breakout before Fed meet & move below 1200's, with Fed rate hike ( 80% probability for rate hike) Markets will move in knee-jerk reaction with few session wicks going below 1175's barely kissing 1150;s or staying above during that time. After the dust settles down, Gold will move up as it will be considered as safe asset.
Now we will have a look at DXY,
So in next 3 weeks DXY will reach 103's and will move down when Fed rate hike is announced. We knew Sell the News which is insync with the post. The upside move for rate hike is already factored in , so the reversal on cards.When it moves down again Gold is sought as safe asset for investment.
Apart from all these, We don't know clear picture of Trump's policies ( Economic especially), by Jan'17 we will get an idea what he is about to do, which will be definitely perceived as bad for Global economy because any change in stable policies is not accepted with cheer.
Now coming to our very own King ( even if it's one eye, We are King ) Indian Economy, you should realize the effects of demonetization.
(a) Due to cash crunch, Business will be affected in Small & Micro firms/industries - Productivity drops
(b) For sometime we will have Unemployment skyrocketing in unskilled sector ( Construction,lathe works etc.)
(c) Real estate prices will drop
(d) Capital to invest in infrastructure & to expand business will be delayed. ( though with rate cuts, cash flow will increase )
(e) Fed rate hike - Rupee depreciates ( Money will flow out of India, DII's are here to save the day )
Need more proof, check this US Index SPX :
When US markets go down what will markets around the world will do ?? I can show the same pattern in many scrips.
But these uncertainty around the markets are enough for Indian markets to go down & What's the safe asset ?? Gold ! Already Indians are good at investing & securing this precious metal, Now demand will go up and Gold prices will rise. Only if something real good happens for whole global economy it will remain below 1200's,else we will see 1360's level in Gold from 1175's.
Now you might have realized Why its Chakravuyha instead of Straight Arrow from Arjuna;s Bow !
I'm expecting your comments to discuss further, so feel free to comment your opinions...
What do we see in the chart above ? Broadening Wedge Ascending Pattern which usually breaks to downside, rarely it moves up. Check out My posts on AUDUSD and USDCAD you will know how this pattern worked in the past. For sample, I'm attaching Aussie, for cad post check in my public profile.
Above chart is not one time instance, I can show you 5 charts for this broadening wedge working in same manner breaking downside and moving up after the breakout. So Gold is expected to give the breakout before Fed meet & move below 1200's, with Fed rate hike ( 80% probability for rate hike) Markets will move in knee-jerk reaction with few session wicks going below 1175's barely kissing 1150;s or staying above during that time. After the dust settles down, Gold will move up as it will be considered as safe asset.
Now we will have a look at DXY,
So in next 3 weeks DXY will reach 103's and will move down when Fed rate hike is announced. We knew Sell the News which is insync with the post. The upside move for rate hike is already factored in , so the reversal on cards.When it moves down again Gold is sought as safe asset for investment.
Apart from all these, We don't know clear picture of Trump's policies ( Economic especially), by Jan'17 we will get an idea what he is about to do, which will be definitely perceived as bad for Global economy because any change in stable policies is not accepted with cheer.
Now coming to our very own King ( even if it's one eye, We are King ) Indian Economy, you should realize the effects of demonetization.
(a) Due to cash crunch, Business will be affected in Small & Micro firms/industries - Productivity drops
(b) For sometime we will have Unemployment skyrocketing in unskilled sector ( Construction,lathe works etc.)
(c) Real estate prices will drop
(d) Capital to invest in infrastructure & to expand business will be delayed. ( though with rate cuts, cash flow will increase )
(e) Fed rate hike - Rupee depreciates ( Money will flow out of India, DII's are here to save the day )
Need more proof, check this US Index SPX :
When US markets go down what will markets around the world will do ?? I can show the same pattern in many scrips.
But these uncertainty around the markets are enough for Indian markets to go down & What's the safe asset ?? Gold ! Already Indians are good at investing & securing this precious metal, Now demand will go up and Gold prices will rise. Only if something real good happens for whole global economy it will remain below 1200's,else we will see 1360's level in Gold from 1175's.
Now you might have realized Why its Chakravuyha instead of Straight Arrow from Arjuna;s Bow !
I'm expecting your comments to discuss further, so feel free to comment your opinions...
Note
Though it broke our 1150's zone, took support around 1120's and went up. Frankly speaking this post is an exemplary case study with comparison of various scrips & its pattern formations and how everything worked in the same way everytime. Enjoy !
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.