Gold
Gold Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Gold Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Economic Events: (GMT)

These are the significant reports this week in the US. See daily forecasts for more detail

Jan. 25

19:15 USD Interest Rate Decision

19:15 USD FOMC Statement

Jan. 26

13:30 USD Core Durable Goods Orders (MoM)

13:30 USD Initial Jobless Claims

15:00 USD New Home Sales

Jan. 27

13:30 USD  GDP (QoQ)

Historical

High:     1916.20

Low:      1321.10

Rule:

One of the simplest ways for traders or investors to take part of this intense gold up trend is to let price action be their guide. In taking a look at the daily chart of gold, we can see numerous price action strategies that occurred in the context of this trending market that nearly all worked out as great entry points. Notice in this chart below how accurate price action can be and the frequency with which it provides high probability entry signals. By no means are we suggesting traders should have or could have taken all of these entries. But when you combine such high probability entry strategies with a sound money management plan, including a profit taking strategy, it would be very hard too not profit consistently in strongly trending markets like we are currently seeing in gold.

Gold is a bull force to be reckoned with right now, when a market is in a strong trend there will naturally be many great entry points. Price action setups can provide a plethora of accurate and non-lagging entries into such trends.

  • Human discretion plays a big role in trading success, despite what internet marketers want you to believe, rigid trading robot and lagging indicator systems will never make you a consistently profitable trader. You need to get an education in price dynamics and naked price chart reading to develop your discretionary trading skills.
  • There is simply no need to cloud up your charts with lagging indicators when mastering a few simpleprice action setupsis much more accurate, effective, efficient, and stress free.
  • When fundamental AND technical forces are in alignment, as with the current situation in gold, price action traders have an extremely valuable opportunity because trading with price action allows for much more accurate entries than other methods as well as providing traders with a set and forget style of trading when used in combination with simple risk to reward scenarios.

Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, wealthy investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets. Gold prices are on the rise again. You now buy three gold contracts. By the end of the week, each contract is up by 100 points. You make a cool $3,000 when you sell the three contracts. This way, you complete your third trade in a series of four trades.

This completes the third trade in the series of four trades. Now, you are ready for the fourth trade. You watch the market. It is moving up again. You enter with four contracts this time. You wait for a few days and the market is up by 50 points. You sell all the four contracts and make a profit of $2,000. Your total profit in this series of four trades is $6,500. This profit you made in just a matter of few weeks which is not bad. After you complete a series of four trades, you remove the profit from your account. Now, you can start all over again with a new series of four trades. The first trade in this series of four trades will always be with one contract.

This is a very simple gold trading strategy that depends on pyramiding your position with a series of four trades and removing all the profit from your account at the end of these four trades. With practice, you will find this gold trading strategy very simple and easy to implement.

  • Gold reacts to uncertainity in the markets
  • A drop in major currencies can indicate a run into gold.
  • Remember investors tend to take profit from gold so watch for trading opportunties when investors are taking profits, not moving out of the markets.

Analysis and Recommendations:

Gold was the true winner last week moving up and down all week to close Friday up 10.00 and up over 2% for the week as investors looked for safe-havens. The USD had been trading down all week and came back to life at the close of the markets Friday rebounding against the euro.

The main focus of last week and this coming week will be Greece, all week long rumors, statements and news kept insisting that a deal was imminent, that a deal had been reached, pushing the euro up all week. Finally by Friday with no deal in place, investors moved to the safety of Gold.

As the weekend ends, with no deal in place and the EU meeting tomorrow, the possibility of a Greek default become more and more likely or something from the ECB or the IMF, but no one can image what that would be.

The question is at this late date, even if a deal is made will it keep Greece from evenutally defaulting.

Gold should continue to climb atleast until an agreement is completed and made public. There is little hope for anything to support the euro.

There is a lot of news due out in the US this week. Last week exisiting home sales dissappointed but jobs reports were positive. This coming week we have the Fed's interest rate and FOMC statements on Tuesday.

At the moment gold continues to benefit from the 'risk-on' theme of recent trading sessions an should continue so in the early part of the week.

Gold Pivot Points (Time Frame: 1 Day)
 

Name S1 S2 S3 Pivot R1 R2 R3

Classic
1663.7333
1657.6167
1652.7333
1668.6167
1674.7333
1679.6167
1685.7333

Fibonacci
1664.4147
1661.8187
1657.6167
1668.6167
1672.8187
1675.4147
1679.6167

Camarilla
1668.8417
1667.8333
1666.8250
1668.6167
1670.8583
1671.8667
1672.8750

Woodie's
1664.3500
1657.9250
-
1668.9250
1675.3500
1679.9250
-

DeMark's
1677.1750
-
-
-
1666.1750
-
-