Fundamental Analysis: Bullish
-Israel started the ground invasion of the war. Reports on the ground are stating fighting with militants is fierce and Israel is making slow progress.
-The Arab world and by extension the Muslim world is pissed. Qatar, Kuwait, and Turkey are at the forefront of the diplomatic assault. Israel removed ambassadors from Turkey.
-UN Security Council had multiple attempts at a ceasefire Vetod by the United States because they didn’t appreciate the language used in the votes.
-UN General Assembly voted in favor of a ceasefire. The UN General Assembly has no legal authority and the vote is non-binding and Israel and the US have acknowledged they will proceed as they planned.
- We haven’t seen any external actors make any legitimate attempt to attack Israel. We have seen 22 US bases attacked last week around the region.
- There are reports that Houthis are sending rockets from Yemen. IDF took them down in the Red Sea. I’m worried the conflict will spread throughout the region and infect other regions in Africa, Europe, or even North America. Small solo attacks are not a worry, it is when the larger military gets involved. Anyone who enters will spiral the whole conflict out of control.
- In the Pacific, the Philippines and China are saber rattling out around the South China Sea. China is a lot more restrained so if an incident occurs, I hope it will be solved diplomatically. If anything pops off over there, expect Tawain to get attacked. If that happens, all of our superconductors will be halted and almost all international economies will suffer greatly. The US is working on bringing chip manufacturing back stateside but that won’t be at a competent level for some time.
-The Federal Reserve is going to give its Interest rate decision Midweek. I am expecting the rate to stay the same or maybe possibly go higher. The numbers are still showing the economy is still pretty hot and Powell repeatedly said the rates will not be cut for fear of the stagflation we had in the 70’s. I expect the rates to stay up for longer… just like he said. I highly doubt the Fed would cut rates but I could be wrong.
Technical Analysis: Bullish
- With all the events regarding the invasion and the UN assembly, there will be a gap. The two areas I am looking at are the ranges around 2010 and around 2020. I’m leaning towards 2010.
- The first idea is gold gaps up to 2010 area and slightly retrace to gather orders before visiting 2020 and higher
- The second idea is gold gaps and goes back to the 1990 range to counteract the large spike in Friday's New York Session.
- The third idea is gold gaps but staying in the 2010 area consolidating before retracing Friday’s move before the bulls take over again.
We are closing out the month with some heavy reports coming up this week. Expect volatility and volume. These are the events we should pay attention to. (M= Medium H=Heavy HHH=Super Heavy)
Housing price index (M), Consumer Confidence (M), ADP Employment Change (H), ISM Manufactoring PMI (H), Fed Interest Rate Decision (HHH), Initial Jobless Claims (M), Average Hourly Earnings (H), NonFarm Payroll (H), Employment Rate (M), ISM Services PMI (H).
-Israel started the ground invasion of the war. Reports on the ground are stating fighting with militants is fierce and Israel is making slow progress.
-The Arab world and by extension the Muslim world is pissed. Qatar, Kuwait, and Turkey are at the forefront of the diplomatic assault. Israel removed ambassadors from Turkey.
-UN Security Council had multiple attempts at a ceasefire Vetod by the United States because they didn’t appreciate the language used in the votes.
-UN General Assembly voted in favor of a ceasefire. The UN General Assembly has no legal authority and the vote is non-binding and Israel and the US have acknowledged they will proceed as they planned.
- We haven’t seen any external actors make any legitimate attempt to attack Israel. We have seen 22 US bases attacked last week around the region.
- There are reports that Houthis are sending rockets from Yemen. IDF took them down in the Red Sea. I’m worried the conflict will spread throughout the region and infect other regions in Africa, Europe, or even North America. Small solo attacks are not a worry, it is when the larger military gets involved. Anyone who enters will spiral the whole conflict out of control.
- In the Pacific, the Philippines and China are saber rattling out around the South China Sea. China is a lot more restrained so if an incident occurs, I hope it will be solved diplomatically. If anything pops off over there, expect Tawain to get attacked. If that happens, all of our superconductors will be halted and almost all international economies will suffer greatly. The US is working on bringing chip manufacturing back stateside but that won’t be at a competent level for some time.
-The Federal Reserve is going to give its Interest rate decision Midweek. I am expecting the rate to stay the same or maybe possibly go higher. The numbers are still showing the economy is still pretty hot and Powell repeatedly said the rates will not be cut for fear of the stagflation we had in the 70’s. I expect the rates to stay up for longer… just like he said. I highly doubt the Fed would cut rates but I could be wrong.
Technical Analysis: Bullish
- With all the events regarding the invasion and the UN assembly, there will be a gap. The two areas I am looking at are the ranges around 2010 and around 2020. I’m leaning towards 2010.
- The first idea is gold gaps up to 2010 area and slightly retrace to gather orders before visiting 2020 and higher
- The second idea is gold gaps and goes back to the 1990 range to counteract the large spike in Friday's New York Session.
- The third idea is gold gaps but staying in the 2010 area consolidating before retracing Friday’s move before the bulls take over again.
We are closing out the month with some heavy reports coming up this week. Expect volatility and volume. These are the events we should pay attention to. (M= Medium H=Heavy HHH=Super Heavy)
Housing price index (M), Consumer Confidence (M), ADP Employment Change (H), ISM Manufactoring PMI (H), Fed Interest Rate Decision (HHH), Initial Jobless Claims (M), Average Hourly Earnings (H), NonFarm Payroll (H), Employment Rate (M), ISM Services PMI (H).
Comment:
On the European front, tensions with the Ukraine war are starting to pick up steam again as the United States redirects its attention to the Middle East, which is considerably more valuable than Eastern Europe. The only more valuable region is the Western Pacific with Taiwan and China because of the Taiwanese international semiconductor dominance.
Because the United States is busy with Israel and massive internal resistance to arming Ukrainians by the Republicans, the European countries are starting to panic that Russia will actually win the war. As a result, the Europeans are considering using seized Russian assets to buy bonds in Germany with a 3% return yearly. That would be billions of dollars a year of Russian money funding the Ukrainians in their conflict.
As per Reuters, Ursula von der Leyen, the president of the European Commission, said on Friday that the EU executive was working on a proposal to pool some of the profits derived from frozen Russian state assets to help Ukraine and its post-war reconstruction.
As per Reuters, Vyacheslav Volodin, the chairman of the State Duma, the Russian lower house of parliament, said Moscow would retaliate in a way that would be more costly to the bloc if the EU moved against Russian assets, many of which are held in Belgium.
If the Europeans do seize and profit from Russian assets, expect oil prices to spike from the most possible restrictions in oil supply. This, as a result, will feed Gold Bulls to take control.
Because the United States is busy with Israel and massive internal resistance to arming Ukrainians by the Republicans, the European countries are starting to panic that Russia will actually win the war. As a result, the Europeans are considering using seized Russian assets to buy bonds in Germany with a 3% return yearly. That would be billions of dollars a year of Russian money funding the Ukrainians in their conflict.
As per Reuters, Ursula von der Leyen, the president of the European Commission, said on Friday that the EU executive was working on a proposal to pool some of the profits derived from frozen Russian state assets to help Ukraine and its post-war reconstruction.
As per Reuters, Vyacheslav Volodin, the chairman of the State Duma, the Russian lower house of parliament, said Moscow would retaliate in a way that would be more costly to the bloc if the EU moved against Russian assets, many of which are held in Belgium.
If the Europeans do seize and profit from Russian assets, expect oil prices to spike from the most possible restrictions in oil supply. This, as a result, will feed Gold Bulls to take control.
Comment:
Looks like we are hitting 1981 today instead of later this week as I expected.
Due to heavy pressure, 66 aid trucks have entered Gaza, not enough but enough to get the ball moving. Precision air strikes on senior Hamas officials do nothing for the fundamentals as de-escalation efforts supersede. Hamas agreed to release some foreign captives in the following days. Nato is condemning but staying out of M.E issue. DXY is currently bullish.
Going forward, we have arrived at the 1981 resistance zone where the three times we saw price interact with 1981 with a bounce to the upside. We must be careful here as price can reject and shoot back up. If we break 1981, we could see 1971 before we dig into that resistance zone. If bears are in control and we head break 1971, we could see 1950's by next week, which would also be the 50% mark of the Israel-Hamas bull run a few weeks ago.
Due to heavy pressure, 66 aid trucks have entered Gaza, not enough but enough to get the ball moving. Precision air strikes on senior Hamas officials do nothing for the fundamentals as de-escalation efforts supersede. Hamas agreed to release some foreign captives in the following days. Nato is condemning but staying out of M.E issue. DXY is currently bullish.
Going forward, we have arrived at the 1981 resistance zone where the three times we saw price interact with 1981 with a bounce to the upside. We must be careful here as price can reject and shoot back up. If we break 1981, we could see 1971 before we dig into that resistance zone. If bears are in control and we head break 1971, we could see 1950's by next week, which would also be the 50% mark of the Israel-Hamas bull run a few weeks ago.
Comment:
Apologies for my error. The 50% retracement from the Israel-Hamas war would be around 1900, which is still far away. We may see multiple retracements before we get back over there.
Regardless, I would want to wait for news events this week and some confirmations before comfortably adapting to a bearish bias.
Currently waiting for ADP Employment Change (H), ISM Manufacturing PMI (H), and Fed Interest Rate Decision (HHH) for tomorrow. If the economy is still doing well, expect Powell to keep rates up for longer instead of raising rates, as the long-term treasury yields may be a constricting factor affecting the economy. The reason is that money is still expensive to borrow, so fewer people will be willing to pay those prices, acting as a deflationary factor. Things are fragile, so expect a neutral or dovish tone from powel during the meeting, quelling some of the volatility.
Regardless, I would want to wait for news events this week and some confirmations before comfortably adapting to a bearish bias.
Currently waiting for ADP Employment Change (H), ISM Manufacturing PMI (H), and Fed Interest Rate Decision (HHH) for tomorrow. If the economy is still doing well, expect Powell to keep rates up for longer instead of raising rates, as the long-term treasury yields may be a constricting factor affecting the economy. The reason is that money is still expensive to borrow, so fewer people will be willing to pay those prices, acting as a deflationary factor. Things are fragile, so expect a neutral or dovish tone from powel during the meeting, quelling some of the volatility.
Comment:
11/03/2023 End of week Recap:
Wednesday:
ADP Employment Change (H) came in at 113K while it was expected to come out at 150K. (Dollar Bears)
ISM Manufacturing PMI (H) came out at 46.7 while it was expected to come out at 49. (Dollar Bears)
Fed Interest Rate Decision (HHH) came out at 5.5% with no rate increase.
At this point after the midweek news events and little catalyst from the war, Dollar Bulls are leaving and giving space for Gold bulls. We managed to hit 1970 before dollar bulls completely exhausted their momentum and let Gold bulls take control from 1970 to 1990 where we hit a minor resistance. At this point we are still in bearish structure as we rejected 1990 failing to create new highs. We will have to wait for Friday's news and Fed speeches before we can have our final safe confirmation that Gold bulls are completely in control.
Friday:
Average Hourly Earnings came out at 0.2% instead of 0.3%. Dollar bears even though that the average hourly earnings slightly went up at 4.1% while expected to be 4%
Non-Farm Payroll came out super weak at 150K new jobs while we were expecting to hit 297K. That is a big decrease indicating that the labour market is cooling off. This is the smallest gain we have seen for a while. (Dollar Bears)
Employment rate came out at 3.9% which is slightly higher than we expected at 3.8%. This indicates that the labor market is cooling off a bit faster than we planned. Overall we are marking an increase of 0.5% since this beginning of the year. (Dollar bears)
ISM Services PMI came out 51.8 while we were expecting 53. Although the production increased by a certain amount, we were expecting more. (Dollar Bears)
Fed Chair Powell came out with his speech with dovish tones as most of the reports confirmed the Fed’s Analysis and plan we have seen since Powell indicated that rates will stay up for longer as we don’t want stagflation. All reports confirm fed’s anticipated labour market slowdown is taking effect. This softness in the market will give Powell more confirmation we are going in the right direction as we now fight the sticky zone between 2%-4%. Overall the main goal to reduce inflation is softness in growth and labor market conditions indicating that the Fed is attentively watching the economy reports to help guide them further.
Technical: We see price kiss the 1970 price point during Wednesday reports shifting power over from Dollar bulls to Gold Bulls. Gold bulls while gaining momentum could not break 1990 before being rejected. This still keeps up in bearish market structure. It was only after Friday News events and Powell’s Doveish tone did Gold Bulls finally grab enough momentum to break 1990 soaring to a high of 2003 before retracing.
Other Fundamentals:
Israel and Hamas war is currently advancing with a ground invasion although that is normal news at this point. No new catalyst to scare Gold Bulls into taking over like we saw in the first half of October. On the contrary, most catalysts, although minor, have been de-escalation moves as the diplomatic pressure rises exponentially. Hezbollah leader came out with a speech that says they will continue as is and have no intention of full-on war, at the moment. At this point, the war events have been priced in.
The USA might levy more sanctions on Russia as none of the sanctions seem to be working with many countries and regions, including Europe, are still buying Russian gas and oil well above the $60 price cap the USA levied. Russia’s economy actually increased since the war started. More sanctions will only hurt Russian and Western citizens.
China has sent warships to protect the Strait of Hormuz. If the gas connection gets cut, China will lose massively as its economy is heavily dependent on oil. Moves have been made to create pipelines to China from Russia pushing them closer together. It will take time but plans are in motion.
Rumors are talking that Russia will supply Hezbollah with Anti-Air weapons. Russia vehemently denies such actions so it’s a maybe on the possible direction this war will go. It’s tricky because a lot can be done to prevent Russia from supplying the weapons until the weapons actually arrive. The only counter I see for the West is boots on the ground which will most definitely kill Biden’s chances of a re-election.
Qatar is talking big and threatening to cut oil to Israel. Since it terminated its membership to Opec in 2019, it is alone at the moment. The Arab population is beginning to put massive amounts of pressure on their governments. The biggest to lose are Jordan, Egypt, and Saudi Arabia as they are to varying degrees not in lockstep with the majority of their population. Egypt is prone to coups but Jordan and Saudi Arabia are not. Those two respectively are Monarchs and are known to quite dissent violently.
Of the Muslim world, Turkiye is the one that is giving Israel the biggest headache and threat to international standing. President Tayyip Erdogan flat-out refused to call Hamas a terrorist organization and instead call them freedom fighters. In return, he called IDF and Israel proper the real terrorist. This is the first time a major country in the world is taking a forceful rebuttal to Isreal’s diplomatic dominance. How close are we to Turkiye’s soldiers on Israeli soil? Not close but the closest we have been since the Gaza Flotilla Raid, maybe even more now. Regardless, the opposition leader in Turkyie, Kemal Kilicdaroglu, who lost by 4% points has been ousted after the general defeat earlier this year. I bring this up as there is no real opposition to Erdogan for the near future and there has been massive support for Erdogan on his stance on the Israel - Gaza war.
Wednesday:
ADP Employment Change (H) came in at 113K while it was expected to come out at 150K. (Dollar Bears)
ISM Manufacturing PMI (H) came out at 46.7 while it was expected to come out at 49. (Dollar Bears)
Fed Interest Rate Decision (HHH) came out at 5.5% with no rate increase.
At this point after the midweek news events and little catalyst from the war, Dollar Bulls are leaving and giving space for Gold bulls. We managed to hit 1970 before dollar bulls completely exhausted their momentum and let Gold bulls take control from 1970 to 1990 where we hit a minor resistance. At this point we are still in bearish structure as we rejected 1990 failing to create new highs. We will have to wait for Friday's news and Fed speeches before we can have our final safe confirmation that Gold bulls are completely in control.
Friday:
Average Hourly Earnings came out at 0.2% instead of 0.3%. Dollar bears even though that the average hourly earnings slightly went up at 4.1% while expected to be 4%
Non-Farm Payroll came out super weak at 150K new jobs while we were expecting to hit 297K. That is a big decrease indicating that the labour market is cooling off. This is the smallest gain we have seen for a while. (Dollar Bears)
Employment rate came out at 3.9% which is slightly higher than we expected at 3.8%. This indicates that the labor market is cooling off a bit faster than we planned. Overall we are marking an increase of 0.5% since this beginning of the year. (Dollar bears)
ISM Services PMI came out 51.8 while we were expecting 53. Although the production increased by a certain amount, we were expecting more. (Dollar Bears)
Fed Chair Powell came out with his speech with dovish tones as most of the reports confirmed the Fed’s Analysis and plan we have seen since Powell indicated that rates will stay up for longer as we don’t want stagflation. All reports confirm fed’s anticipated labour market slowdown is taking effect. This softness in the market will give Powell more confirmation we are going in the right direction as we now fight the sticky zone between 2%-4%. Overall the main goal to reduce inflation is softness in growth and labor market conditions indicating that the Fed is attentively watching the economy reports to help guide them further.
Technical: We see price kiss the 1970 price point during Wednesday reports shifting power over from Dollar bulls to Gold Bulls. Gold bulls while gaining momentum could not break 1990 before being rejected. This still keeps up in bearish market structure. It was only after Friday News events and Powell’s Doveish tone did Gold Bulls finally grab enough momentum to break 1990 soaring to a high of 2003 before retracing.
Other Fundamentals:
Israel and Hamas war is currently advancing with a ground invasion although that is normal news at this point. No new catalyst to scare Gold Bulls into taking over like we saw in the first half of October. On the contrary, most catalysts, although minor, have been de-escalation moves as the diplomatic pressure rises exponentially. Hezbollah leader came out with a speech that says they will continue as is and have no intention of full-on war, at the moment. At this point, the war events have been priced in.
The USA might levy more sanctions on Russia as none of the sanctions seem to be working with many countries and regions, including Europe, are still buying Russian gas and oil well above the $60 price cap the USA levied. Russia’s economy actually increased since the war started. More sanctions will only hurt Russian and Western citizens.
China has sent warships to protect the Strait of Hormuz. If the gas connection gets cut, China will lose massively as its economy is heavily dependent on oil. Moves have been made to create pipelines to China from Russia pushing them closer together. It will take time but plans are in motion.
Rumors are talking that Russia will supply Hezbollah with Anti-Air weapons. Russia vehemently denies such actions so it’s a maybe on the possible direction this war will go. It’s tricky because a lot can be done to prevent Russia from supplying the weapons until the weapons actually arrive. The only counter I see for the West is boots on the ground which will most definitely kill Biden’s chances of a re-election.
Qatar is talking big and threatening to cut oil to Israel. Since it terminated its membership to Opec in 2019, it is alone at the moment. The Arab population is beginning to put massive amounts of pressure on their governments. The biggest to lose are Jordan, Egypt, and Saudi Arabia as they are to varying degrees not in lockstep with the majority of their population. Egypt is prone to coups but Jordan and Saudi Arabia are not. Those two respectively are Monarchs and are known to quite dissent violently.
Of the Muslim world, Turkiye is the one that is giving Israel the biggest headache and threat to international standing. President Tayyip Erdogan flat-out refused to call Hamas a terrorist organization and instead call them freedom fighters. In return, he called IDF and Israel proper the real terrorist. This is the first time a major country in the world is taking a forceful rebuttal to Isreal’s diplomatic dominance. How close are we to Turkiye’s soldiers on Israeli soil? Not close but the closest we have been since the Gaza Flotilla Raid, maybe even more now. Regardless, the opposition leader in Turkyie, Kemal Kilicdaroglu, who lost by 4% points has been ousted after the general defeat earlier this year. I bring this up as there is no real opposition to Erdogan for the near future and there has been massive support for Erdogan on his stance on the Israel - Gaza war.
Comment:
Last thoughts:
Trade Idea 3 came out to be the scenario for this week. We were waiting for Gold bulls as we are bullish in the higher timeframes. We almost switched over our bias but the news from Wednesday and Friday confirmed that gold bulls are still in control. I’m no fan of countertrend trades and personally would rather wait to trade with the trend. However, if you were to enter sells while we retrace there were four ideal sells and two ideal buys. This isn’t to say you need to catch them all 100%, it is just you could have went in and out within those ranges with clean one-sided volatility movement. Get your daily pip amount and leave.
First Sell: Wait and retest minor resistance zone at 2005 and ride down to 1991. (140 pips level to level ~7.5 hrs)
Second Sell: We revisit 2005 with one wick but reject back under. There was no real confirmation for this sell besides the one rejection after 2005. Not the best but not the worst idea. (250 pips level to level ~3hrs)
Third Sell: 1988 to 1970 which would continue our bearish movement after retest in the 1988 to 1991 key level of interest. (180 pips ~3hrs) **The Exact Same time as Second Sell the day before**
First Buy: No confirmation for this trade other than touching 1970 Key level and rejecting. Smart Buy Limit if planned ahead unfortunately there is no confirmation to enter trade if you are watching live. (180 pips back to the 1988 level in about 14.5hrs.)
Second buy: This movement was due to NFP news coming out overtly bearish. Gold Spiked to 2001 from 1988, 120 pips, in less than 5 mins. I would not recommend entering before news as that is too volatile for my taste.
Fourth Sell: After NFP hit 2001 minor level, high risk high reward sell back to at least 1991 to 1988 would have been valid after the rejection, retest, and rejection. 120pips in about 15 mins. At this point, after all the bullish pressure, you will have to be in and out of the trade as you would be technically going against the trend.
Trade Idea 3 came out to be the scenario for this week. We were waiting for Gold bulls as we are bullish in the higher timeframes. We almost switched over our bias but the news from Wednesday and Friday confirmed that gold bulls are still in control. I’m no fan of countertrend trades and personally would rather wait to trade with the trend. However, if you were to enter sells while we retrace there were four ideal sells and two ideal buys. This isn’t to say you need to catch them all 100%, it is just you could have went in and out within those ranges with clean one-sided volatility movement. Get your daily pip amount and leave.
First Sell: Wait and retest minor resistance zone at 2005 and ride down to 1991. (140 pips level to level ~7.5 hrs)
Second Sell: We revisit 2005 with one wick but reject back under. There was no real confirmation for this sell besides the one rejection after 2005. Not the best but not the worst idea. (250 pips level to level ~3hrs)
Third Sell: 1988 to 1970 which would continue our bearish movement after retest in the 1988 to 1991 key level of interest. (180 pips ~3hrs) **The Exact Same time as Second Sell the day before**
First Buy: No confirmation for this trade other than touching 1970 Key level and rejecting. Smart Buy Limit if planned ahead unfortunately there is no confirmation to enter trade if you are watching live. (180 pips back to the 1988 level in about 14.5hrs.)
Second buy: This movement was due to NFP news coming out overtly bearish. Gold Spiked to 2001 from 1988, 120 pips, in less than 5 mins. I would not recommend entering before news as that is too volatile for my taste.
Fourth Sell: After NFP hit 2001 minor level, high risk high reward sell back to at least 1991 to 1988 would have been valid after the rejection, retest, and rejection. 120pips in about 15 mins. At this point, after all the bullish pressure, you will have to be in and out of the trade as you would be technically going against the trend.
Price has reached 2005 minor resistance from the previous bear's exhaustion at the beginning of the bear run this weekend. If price rejects 2005 and continues downward, we can see a bearish structure forming, especially on the lower time frame.
News:
The housing price index came in under previous. Bearish Dollar.
Consumer Confidence came in higher than forecast, although lower than previous. Dollar Bulls but not strong.
Fundamentals:
Tensions in the Middle East seem to have reached their max point, as we haven't seen any credible escalations since the ground invasion. There is still saber rattling but, for the most part, contained. From an optimistic point of view, it looks like tensions may simmer down going forward. Israel has all its vulnerable points reinforced, and any attack will probably be futile. Ariel bombing has decreased significantly, and Israel seems to be in international political damage control at this point as they are granting more humanitarian aid into the strip as a sign of good faith. If there are no significant escalations, it seems Israel will complete its mission of neutralizing and disarming this version of Hamas, guaranteeing at least a few more years of relative peace. At this point, it seems the conflict has been priced in, and the only realistic perspective of a fundamental catalyst would be on the international stage with an arms embargo or sanctions against Israel reigniting gold bulls. Not likely, but I don't see a physical escalation between Israel and Hamas bringing gold bulls back. If a country like Iran or Turkey decides to send in a military to attack, then I could see gold bulls coming back, but that is highly unlikely with a US naval fleet in the neighborhood. The US knows it can not confidently contain control of the Middle East if that happens without a severe cost to the US, so I am slightly a bit more confident the US will try to maintain the status quo. This doesn't mean the US is not preparing for the worst. There are reports that the US is sending multiple flights a day to Israel reinforcing troops and equipment. That always raises questions as to why more troops are being sent in. Regardless, this is now a diplomatic battle.
Technicals:
Overall, mixed data reports adding more steam to dollar bears. If we break 2005, we can see 2010 with a possibility we hit 2020 with the rest of the news events of the week. If we reject 2005, we can see price going back to 1990 and maybe 1981 if the news events bring in dollar bulls.