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...
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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 !
InsiderB, Can you please opine, encompassing all three- Dollar:Gold:'Black Gold'- Crude Oil. Is it of any significance to overall scenario?
FYI:
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.
InsiderB
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@rajesh2467, From Indian point of view we are staring at huge problems ahead but with confidence. Bcos, Dollar is surging which means rupee depreciates & Gold import will increase bcos of demonetization, so we will have huge spending in terms of foreign exchange & throw in the crude oil, we need to import paying high dollars.
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.
rajesh2467
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Thanks.
nirav5
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Thanks for your time and valuable analysis! I was bullish for gold with my SL of 1200. I will revise my SL now.
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. :-)
InsiderB
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@nirav5, Thats excellent view I would say bcos of the Dxy, Nifty will rise up and when it gets dumped, Nifty moves down then a big surprise is waiting to happen. I'm really curious about Jan'17 & what will happen in Nifty, that will be another post altogether. But if someone is buying gold for investment purpose they can do anytime, only trading differs as you need to wait for the setup.
Pranam.
youtube.com/watch?v=OyLdgQinxpY