Initiating a long term bullish position in goldThis is an analysis that I hope that it ages well, as I am starting a long term position in gold today and adding this asset to my investment portfolio. Therefore, this is not a post about an isolated trade, with a specific expiration date or focused on the short-term.
In fact, from a trading point of view I have already lost some great entry opportunities, since November 2022, which the asset provided. Looking back on the chart, I could see four previous entry opportunities that fit my setups. Unfortunately, I wasn't psychologically prepared to trade them and I was left out, but I will try to take some advantage of this situation and later write a study post pointing out these entries. Another post on trading psychology, This is an analysis that I hope that it ages well, as I am starting a long term position in gold today and adding this asset to my investment portfolio. Therefore, this is not a post about an isolated trade, with a specific expiration date or focused on the short-term.
In fact, from a trading point of view I have already lost some great entry opportunities, since November 2022, which the asset provided. Looking back on the chart, I could see four previous entry opportunities that fit my setups. Unfortunately, I wasn't psychologically prepared to trade them and I was left out, but I will try to take some advantage of this situation and later write a study post pointing out these entries. Another post on trading psychology, fears involved, strategies to control them and analysis paralysis may also be written later (spoiler: risk sizing and embracing the risk consciously helps to tame the beast) .
However, from an investment point of view, with a long-term perspective and also taking advantage of some hedging to reduce risk, it is better to buy gold late than never, or as I prefer to say, better late than too late. Because if a strong bull run starts after this breakout, I would regret not buying at the $2000 quote level. And, yes, there are indications that this may become a reality.
The first indication comes from the analysis of the chart, gold prices have been stuck into a multi-year congestion between $1700 and $2000. Tipically, the longer the congestion is, the more intense its breakout and further away the target, and historically gold has been king of this setup. The $2000 level is where the price peaked during the covid crisis and the russian invasion of Ukraine. I mean, this price level is imposing a very strong limit on quotations. But we're now facing the threat of a future interest rate and expected inflation much higher than we've been used to over the last decades (since the 90s, specifically), and these things could be a real game changer for the market scenario. So, here the gold quotes are, back at the $2000 resistance level and showing strong volume near it. Of course, resistance can work once again, but we have to trade probabilities and deal with risk, and that means grabbing a good entry opportunity like this one, and accepting a loss if the signal deviates.
The second indication comes from the analysis of the market cycle. All clues point to the fact that we may already be at the beginning of a secular bear market cycle, which means that expected future returns for the next years (10y average) can be near zero, single digit, or even negative. I'm not predicting some kind of crash here, it's different, this is not a single intense bearish movement, but a future outlook of low stock market growth. Using the model published by Ed Easterling in his book, Unexpected Returns, the top (thus the beginning of the end) of a secular bull market comes with high P/E's, low dividend yields, low inflation and low interest rates. This was just the scenario we had few years ago and it started to crack, first inflation got out of control (2021), then interest rates started to rise (2022) and P/E's just began to fall with last year falling quotes, but it's still on a high level, so this could just be the beginning of this cycle of low returns.
With this in mind, it is important to notice that gold is often the best secular bear market asset par excellence (see the returns in the 2000s and in the 1970s periods), but so far in this newborn bear cycle, gold has yet to shine, despite the very bearish year of 2022.
Considering the secular bear market hypothesis and the very long chart congestion, added to the habit of this asset to make strong breakouts, I decided to initiate a long term bullish position in gold. I made my entry using the ETF GLD. I bought the shares today, March 20th, 2023, at the market opening, @184.17. To manage my risk I also bought a bear put spread with strikes 166/165. I intend to stop the loss if this entry reaches a -6.5% loss. I've bought enough options to pay back my losses if that happens. The protection has cost me 0,8% of the position. Hopefully in the future I will post more about this position, and then I will use the GLD chart. For now, for a general approach, I prefer to do my analysis using the future contract chart.
Bearishcycle
USDCAD Bearish Reversal CycleGood afternoon ladies & gents,
USDCAD will most likely start it's Bearish Cycle today and NFP is likely to be the catalyst. After trading up into the Weekly Inflection point, we saw a sharp rejection to the downside. Price has presented us with D1 SMT Divergence allowing DXY to fill the imbalance above and USDCAD has filled the imbalance above whilst not making a new high.
In light of this, I do anticipate a short to occur today (Bearish Sentiment on DXY) and today, it's possible to enter with a stop above the highs.
Many opportunities to enter next week if not today.
Disclaimer: This is my idea, take and execute this idea at your own risk and discretion. Remember to manage your risk appropriate on the off chance that I'm wrong.
-AmplaFX
EURUSD - Potentially, A Major Short Opportunity - Take 2The earlier published chart suggesting short did not develop as the retracement bounce was still in progress see chart linked below (29th June).
This now appears to be complete and therefore, I am republishing the idea with revised/adjust wave counts and associated details. I think it could offers even better level to short from with relatively lower risk.
Background: The current bearish cycle commenced in February 2018 and it is still intact and has some way to go. In the short term it had some very messy sharp up and down swings, however, it is very likely that it has resumed a longer term bearish trend – see previously published chart in January 2018 lined below.
Fundamentally , like most economies, Europe too has lots of cross currents which are likely to impact relative strength of EUR Vs USD, such as:
a. The fall out from the impact of Covid-19
b. Political differences within the bloc might become more pronounced.
c. In addition the Brexit negotiation which must conclude by end of Dec 2020 might not go well in the prevailing backdrop of negative social mood when disagreements are more likely
Summary of some of the technical:
Monthly - From 1987 to Present
Major Bullish cycle completed in February 2008. Since then it has been in clear bearish channel probably developing a triple zigzag in the form of WXYXZ. If correct then it might be about to commence 2nd intermediate zigzag with in wave "Z".
Monthly - From 2008 to Present
Price has retraced 66.67% (2/3rd) of the decline from February 2018 to March 2020 low, hitting the resistance from declining channel line and horizontal structural area which has acted as support resistance several time in the past. 50 Period RSI at zero line.
Weekly - suggesting the retracement is likley complete at major level explained above and has posted a Key Reversal Candle. A follow through will help confirm a resumption of the bearish cycle.
Commitment of Traders (COT) Data
That the Open Interest reached historically high level of 706,458 and as dis the commitments of the major players as follows:
Non Commercials (Large Speculators) are Net Long with 196,943 Vs Previous week's 199,751 &
Non Reportable (Small Speculators) are Net Long with 62,421 Vs Previous week's 56,510.
These data shows that bullish sentiments for EURUSD has reached relative extreme where trend change could develop.
Conclusion: Longer term bearish decline is anticipated. Use your own method of entry and trade management. Suggested entry could be upon:
1. A clear breakdown below 1.1700 which would help confirm the resumption of downtrend OR upon retracement towards 1.1850 with stops just above 1.20.
2. Initial downside target could be around 1.120 area and secondary target around 1.06
3. Invalidation would be a close above 1.1200
Caution: This is my interpretation of price action using TA approach that I consider helps me the most, but could be completely wrong. Therefore, as always, do your own analysis for your trade requirement and ignore my views.
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Thank you for taking the time to read my analysis.
DanV
TripAdvisor Buy IdeaW1 - Bearish cycle is near its end. We have bullish divergence and false break.
D1 - Special cycle is near its end, bearish divergence has formed. Currently we have double waves to follow.
H4 - False break of trendline. No breakout of last high yet.
Measuring the first wave we could see a possibility of a push down also bullish divergence is forming. So we may expect the price to go deeper and then to push up.
This setup is valid until the last low at 35.46 holds, false breaks can be neglected.
GBPNZD Buy IdeaW1 - Bearish cycle completed.
D1 - Good up trend line has formed.
H4 - Price broke above the range and is still holding
H1 - We had two false breaks. We will be applying the double trend line breakout principle here. After the breakout of the first trend line wait for the double wave correction to complete itself and go short with the breakout of the most recent trendline.