What do we see in the chart above ? 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 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...
FOMC meet 13-14 Dec.
OPEC meet 30 Nov.
For first time, OPEC on 18th Nov commented, Iran should agree to production freeze of 3.92 mil Brl., as against Iran's target of 4-4.2 mil Brl.
I believe if they have reached this level of discussion, means some production freeze figures are being seriously considered.
So far, Iran has been soar orange within OPEC after sanctions were lifted.
But they kept playing at edges with positive statements that they are open to discussions as long as 4-4.2mil figures are safeguarded.
Any agreement between 3.92-4/4.2ml 'may' be considered removal of main obstacle to production freeze talks
and Crude may zoom $50+, may be a small trigger for markets around the globe...not withstanding US trade policy decisions by new Prs. which are expected to be announced in early Jan'17.
Only Fed meet is the high priority here, for crude I haven't checked the long term view & the meets and news events will create volatility, to be market mover & crude to raise above $50 some serious agreement needs to be made with immediate affect. They won't do now, bcos they will be waiting to see what will be trump's first move.
In short, we will have moderate bull or stagnating Indian markets.
DXY has taken a breakout near 100 level. Just trying to connect some dots, Nifty's upside retracement for 8250 - 8400 level can be expected when the DXY will perform it's downside retracement till it's recent breakout level.
Post DXY's retracement it can resume it's uptrend again and probably Nifty will aim for another Bear's round.
Let's be open for Bear and Bull rounds. Looks like December will have very nice trading opportunities.
Thanks again for your posts. :-)
Bull or Bear, Never Fear :)