It looks like the Trump “reflation” trade is finally starting to run out of steam.
Earlier this week, the gold-price of the dollar finally broke below its 10-day EMA. This has not happened since the week of the Presidential election.
Afterwards, the price continued to fall until it broke through the 21-day EMA and closed below it. It then rose above the 21-day EMA on Friday but still stayed above the 10.
My dollar long trade ended up getting stopped out, and I lost about 76 mAU (7.6 hundredths of an ounce). But that’s no big deal, because I’m either going to get a better chance to go long or else (even better) there’s going to be a reversal to the short-side.
Here’s the chart for usd/gold.
RSI has now fallen to barely above 50. And we see that there has been a MACD crossover. This is either a setup to “buy the dip” on the dollar or else it’s a trend reversal.
This coming week, I’ll be looking for a bullish pin, railroad, or bullish engulfing candlestick pattern on the inverted $gold chart. I showed the $one:$gold chart above so that RSI and MACD would show up correctly. But here’s the -$gold chart in which you can see the candlesticks:
If I see any of the three patterns mentioned, I’m going long the dollar/short gold.
On the other hand, if MACD falls below zero, RSI falls below 50, and the 10 EMA crosses the 21 EMA, I’m going short the dollar/long gold.
If I end up going short the dollar in my FX Choice gold-denominated Forex account, I will also take the cash I’ve saved up while gold has been falling and use it to buy more physical gold from GoldMoney.
Here’s the S&P 500 priced in gold.
This also looks like a very good chance to “buy the dip”. But again, we need to see a reversal pattern before moving in.
Now here’s the TLT bond fund:
When I last talked about TLT, I couldn’t tell if it was in a slow downtrend or was trading sideways (ranging). It’s now very clearly in a range. So I would expect it to start falling soon.
When it gets down to around 90 mAU/share (0.09 Troy ounces per share), this will be a chance to look for long entry points.
After the boring months of November and December, in which the dollar rose so rapidly that it was practically untradeable, its nice to see the market returning to its usual volatility again.
Hopefully, we can all make use of this to accumulate plenty of gold while it lasts.
I use GoldMoney to buy my gold at half a percent over spot.