Chapter 29 Waiting For New Guidance Under An Oscillating Pattern(10.31)
Fundamentals
During Tuesday's (October 31st) Asian session, spot gold oscillated narrowly and it is now trading at 1955. Yesterday, gold oscillated downward from a high at 2006 to a lowest level at 1990. After several attempts to break the high, gold stopped at 2002 and closed the daily chart lower. Generally, gold bulls are not as strong as they were days ago but show caution and restrictions. The oscillation yesterday was in line with our expected range from 1989 to 2009. Since gold did not reach the high, and failed to arrive at the recommended level, investors should watch and see. Those who are aggressive to sell at highs, can make proper profits. To make it clear, investors should not feel pity when they miss the profits, as there are always chances to make a margin. In contrast, investors need to act according to what they know and make profits from their knowledge. Fundamentally, gold prices are still supported by the risk aversion of the Middle East conflict, and the marginal change will be less. In the near term, investors need to focus on the approaching Fed rate hike solution and the Nonfarm Payrolls, while aggressive investors should buy lows and sell highs in these two days (keep the main logic of selling at highs).
Data: U.S. Federal Reserve Bank of Dallas' general business activity index for manufacturing in Texas fell to -19.2 in October, down from -18.1 in the prior month with an expected figure of -16. Besides, the Manufacturing Employment Index was 6.7, a decline from the previous 13.6. The Eurozone Economic Sentiment indicator was 93.3 in October, the expected figure was 93, and the previous figure was revised from 93.3 to 93.4. Industrial Prosperity Index was -9.3, while it was expected to be -9.5 with the previous index revised from -9 to -8.9 amended. Then, the U.S. Service PMI was 4.5, while it was expected to be 3.4, and the previous figure was revised from 4.0 to 4.1.
News: According to Nikkei News, the Bank of Japan will consider further adjustments to yield curve control (YCC) at today's monetary policy meeting, potentially allowing the 10-year government bond yield to rise above 1%.
Geopolitical: Israel's Prime Minister says "there will be no" ceasefire in the Gaza Strip, and Israel continues to heavily bombard Gaza.
Today's focus: U.S. House Price Index for August, the Chicago PMI, and Consumer Confidence for October.今
Technical Analysis
Gold went weaker yesterday. Unlike the strong pattern in the past days, gold failed to break the previous highs and showed a weak trend. Moreover, the daily chart closed lower, and the bullish sentiment cooled, indicating a possibility that gold enters a phase weakening pattern. At the same time, if the data release later this week doesn't support it, gold will start a smooth retracement with the technical pattern. Nevertheless, the current market expectation is that the Fed will not raise the interest rate and the October Nonfarm Payrolls will not be supportive although the Auto Strike ended with a payroll rise. Furthermore, with a bad expectation in the October Nonfarm Payrolls and the mixing of bears/bulls, a reversal in data may even appear later, which will boost the difficulties of trading gold. Accordingly, catching the opportunity is essential, as the opportunity lies in tremendous oscillations. In the coming two days, gold will still oscillate near 2000, and gold bulls and bears have a chance. Thus, it is better to wait, so that we can avoid losing. Today, investors should pay attention to the range from 1980 to 2003. Trading Recommendations: Sell at highs. If gold surges to 2003, investors could go short with small positions, and set the stop-loss at 2008. To take profits, the first target will be at 1992, where they can reduce the position size and move the stop-loss to breakeven, and the second target should be at 1980. Meanwhile, if gold appreciates to 2013, investors could go short with small positions, and stop loss by 5 dollars. The target to take profits will be the same as the first time.
Trading Recommendations
Trading direction: Short
Entry price: 2003
Target price: 1980
Stop loss: 2008
Support: 1992.000/1980.000
Resistance: 2009.000/2020.000
