Hi guys,
Crazy week in the precious metals market and the FED crashed the whole market into oblivion. Luckily we were on the right side this time as a bearish correction was more than likely, however I did not expect a move below 1800. We closed the week a couple dollars below the 61.8 fibo support line at 1768, so this is concerning (it might just be a SL-hunt to confuse gold bulls), but technically this opens up the gates for further potential downside. Silver remains supported by the 61.8 fibo support level and the D200 SMA, so there is still a big possibility of a bullish comeback. Also indicators are highly oversold, so a correction is more than likely.
Since the FED did not do anything but was 'talking to talk about tapering' and projected 2 'possible' interest hikes in 2023 (so 18 months from now, read again), Powell ridiculising his own dotplot during the press conference, I find this move highly over-exaggerated. In any case, bearish parabolic moves know parabolic bullish corrections (and vice-versa).
From a technical & fundamental point of view, gold & silver are a 100% buying opportunity eyes shut with crazy upside potential. As mentioned in my previous update, the facts on the ground remain the same. The FED is still buying $120 billion worth of bonds EVERY month, the money printer is still going crazy and inflation is projected to hit 4% by many analysts in the near term. Not to mention US10 Yields have crashed below 1.5% post-FED. It's a fallacy to think this is transitory inflation, it's more likely here to stay for years to come.
A big risk for the precious metals specifically and commodities in general is that inflation in the market can turn into deflation. Once central banks will stop the moneyprinter to fight the high inflation, there is shortage of money supply and prices crash at a very fast rate creating deflation. But we're still far from it, as the accomoditive monetary policy is still here.
I am expecting a strong bullish reaction in the coming weeks, but it is important to time the entry. We have several risks luring, Basel 3 implimentation next week being the biggest one. An equity sell-off being the other, with DJI & SPY closing extremely bearish this week below the bullish trendline for the first time since March 2020. The Nasdaq closed the week as an evening star candle, which is a potential bearish reversal signal. Important to know is that strong equity sell-offs are bullish for gold & silver first (repositioning of money) but turns bearish later if the sell-off persists as investors flock to cash (March 2020 case).
Price Action that I am looking at is bearish de-acceleration on the H4 timeframe and strong & engulfing bullish H4 candles. After such a huge move, we should see price range for a weeky or two (if not longer). It took the gold bears 2 weeks of ranging before they made the big move down. Bulls recapturing the 1800 handle on a daily timeframe is extremely important to regain the confidence and that would be a strong buy signal for me.
For now I am keeping my eyes on the 1750-1755 zone as a potential platform for the rocket to 2000+. In case 1750 breaks, we are looking at the 3rd test of the bullish trendline and I expect price to break it this time towards the 1600-1610 demand zone. Below that we have the 1550-1555 zone as the next major support.
A long read this time, but there is so much going on I couldn't make it shorter. 😁👌🏻
Love and hugs,
Cesaro
Crazy week in the precious metals market and the FED crashed the whole market into oblivion. Luckily we were on the right side this time as a bearish correction was more than likely, however I did not expect a move below 1800. We closed the week a couple dollars below the 61.8 fibo support line at 1768, so this is concerning (it might just be a SL-hunt to confuse gold bulls), but technically this opens up the gates for further potential downside. Silver remains supported by the 61.8 fibo support level and the D200 SMA, so there is still a big possibility of a bullish comeback. Also indicators are highly oversold, so a correction is more than likely.
Since the FED did not do anything but was 'talking to talk about tapering' and projected 2 'possible' interest hikes in 2023 (so 18 months from now, read again), Powell ridiculising his own dotplot during the press conference, I find this move highly over-exaggerated. In any case, bearish parabolic moves know parabolic bullish corrections (and vice-versa).
From a technical & fundamental point of view, gold & silver are a 100% buying opportunity eyes shut with crazy upside potential. As mentioned in my previous update, the facts on the ground remain the same. The FED is still buying $120 billion worth of bonds EVERY month, the money printer is still going crazy and inflation is projected to hit 4% by many analysts in the near term. Not to mention US10 Yields have crashed below 1.5% post-FED. It's a fallacy to think this is transitory inflation, it's more likely here to stay for years to come.
A big risk for the precious metals specifically and commodities in general is that inflation in the market can turn into deflation. Once central banks will stop the moneyprinter to fight the high inflation, there is shortage of money supply and prices crash at a very fast rate creating deflation. But we're still far from it, as the accomoditive monetary policy is still here.
I am expecting a strong bullish reaction in the coming weeks, but it is important to time the entry. We have several risks luring, Basel 3 implimentation next week being the biggest one. An equity sell-off being the other, with DJI & SPY closing extremely bearish this week below the bullish trendline for the first time since March 2020. The Nasdaq closed the week as an evening star candle, which is a potential bearish reversal signal. Important to know is that strong equity sell-offs are bullish for gold & silver first (repositioning of money) but turns bearish later if the sell-off persists as investors flock to cash (March 2020 case).
Price Action that I am looking at is bearish de-acceleration on the H4 timeframe and strong & engulfing bullish H4 candles. After such a huge move, we should see price range for a weeky or two (if not longer). It took the gold bears 2 weeks of ranging before they made the big move down. Bulls recapturing the 1800 handle on a daily timeframe is extremely important to regain the confidence and that would be a strong buy signal for me.
For now I am keeping my eyes on the 1750-1755 zone as a potential platform for the rocket to 2000+. In case 1750 breaks, we are looking at the 3rd test of the bullish trendline and I expect price to break it this time towards the 1600-1610 demand zone. Below that we have the 1550-1555 zone as the next major support.
A long read this time, but there is so much going on I couldn't make it shorter. 😁👌🏻
Love and hugs,
Cesaro
