Gold Warning: Danger Ahead!

Let the above chart speak for itself. The bubble has started to deflate after the more than one year upside correction. The 2 systems that I used in this chart - Ichimoku (which is a trend following system) and the 50MA (the thick blue line) signal only one thing - TIMBER! Watch out, bulls!

USDollar Index New High

 USDollar Index Monthly Chart

A historic moment! After 20 consecutive months of range-bound price action and 2 or 3 fakedowns, the USDollar Index (ticker: USDX, DXY) finally broke out the frame pattern and is headed for new highs. What does this mean for gold? Nothing positive I think. Gold is trending down and unless the USDX starts to correct below the breakout level of 100.78, I see no stop for gold's plunge. I am observing a very different trading environment post-elections and I like it - a trending trading environment, which is probably the best, that a trader could ask for; the trends are well-defined, there are no mean reversions and once you identify an intraday trend, it's easy to jump on it and hold your positions for a nice profit, just wait for a pullback to enter. Don't bet against the trends, this is not a winning strategy in the current environment. Also, don't be one of these guys, that wait for confirmation forever, because they're afraid to enter a position, as they're betting too big a position and this drains their mental capital, end up buying the top of the intraday trend and sell the low. I've done this, it's not something you should do as a daytrader. As a daytrader you should be brave and jump into the deep with the head towards without knowing how deep it is, but you have to be prepared to get out very fast, should the market turns against you; you can't afford to hold a position that goes against you more points, than your potential profit would be.

Good luck all and happy weekend,
Petko Bankoff

Gold: A New Bear Market Is Born

 Gold Futures Monthly Chart (MN)

The big picture in gold is getting clear: price is BELOW the Ichimoku Kumo Cloud (indicative of a bear market), it rejected the 200MA resistance (the blue line), the Kijun-sen (the small blue line) curently provides temporary support on its way towards its demise sub 1000, which, if you zoom in, looks like a nice bear flag on the lower time frames (D1).
A common concept of all the delusional foolish gold bugs is that gold is a long term bull market. Well, this ain't true at all. All I can see is an inflated bubble that burst. The monthly chart that I presented to you above covers the last 10 years of data. You can clearly see that gold broke below the orange Kumo Cloud, and after an upside correction, it was unable to break above the cloud again and is currently forming a new bear market Kumo (the blue cloud), which is indicative of a newly forming bear trend. So for the gold bugs - I don't know what do you mean by "long term investing", but in the next 10-20-30 years I see only downside for gold, though with some occasional upside corrections, of course. Unlike you, I can't wait a lifetime to see if my trade works or not, life's too short to waste it in retarded philosophies, invented by a bunch of gold brokers-gurus, who are trying to sell you butterflies and fairy tales.
I see the next stop in gold around the 200MA, which is around $900/ounce. I do believe it will be broken and gold will continue down towards $600 (and why not $400), though there will be some fight there and it won't come easy.
Now to zoom a bit further, let's take a look at the weekly chart. The beauty of technical analysis is that you can actually support your thesis with facts, not imaginary "currency wars" and "end-of-the-world" fairy tales about unicorns.

Gold Weekly Chart (W1)

Gold looks like a failed rally from the lows around 1030s; the last few candles are big red candles, which means only one: the rally (if we can call it that way) is over! To be more specific: that's a correction in a bear market, I can hardly call 300pts move over a whole year period, a "rally". I'm sorry, gold bugs, but I see absolutely nothing positive in gold's price action, you're being fooled badly by a bunch of retarded gold brokers, who make loads of money from your commissions and your stupidity. All those gold brokers, who try their best to convince you that gold is actually in a bull market (here follows laughter from the public), remind me of those bankers pre-07, who were selling rubbish subprime MBS, knowing that they're selling junk, but were still doing it, because they got greedy to get more and more commissions, regardless of the fatal consequences for the whole world, not just for their clients. 

On a positive note, a weekly candle close above 1340 would open the door for more upside correction towards 1500s, though I see it as highly unlikely, given the recent price action development. 

Good luck to all, bugs or schmugs, stay smart.

Petko Bankoff

Gold Not So Precious

 Gold futures market H4 time frame (ticker: GC_F) 

Gold looks pretty ugly post-US elections, it's hard to make any sense now, so it's best to leave the dust to settle, though I personally am looking for opportunities to short. The bullish stance has been neglected now, awaiting bearish chart patterns to emerge to define risk/reward in terms of stop loss and take profit levels. Stand by.

A Historic 120pts Drop of the US Stock Market S&P500 Futures

A historic 120pts drop of the US stock market S&P500, following the US elections results, that was retraced more than 50% of its original plunge. I assume that circuit breakers were activated and the SPX futures market was "limit down", i.e. it was halted, or the government-operated Plunge Protection Team (yes, there is such people) got busy and bought the market, saving it from mass panic and sell off. Currently it is testing the 61.8% Fibonacci level for resistance. A break above this level I expect new all time highs and only the sky is the limit.

SPX - USD Correlation

Interestingly enough, the almost perfect correlation between USDollar Index (ticker: USDX, DXY) and the US stock market S&P500 (ticker: SPX) remains now that the elections finished. I'm monitoring this situation closely and awaiting further development, one is definitely faking.

USDollar Index and S&P500 Correlation

For second day in a raw, at least that's my impression, the USDollar Index and the S&P500 show positive correlation close to 0.8-0.9.

What does this mean, I guess we'll find out pretty soon. One is faking for sure, but which one?

Crude Oil - a Market to Avoid

This is the kind of market behavior you have to avoid at all cost. Gaps, low liquidity and unpredictable, sharp, but short moves in both directions - death for any daytrader.

Crude Oil CL_F December contract (M15)

Crude Oil CL_F December contract (M5)

Does Gold knows something we don't?

Interesting development in gold with the US session open, does gold knows something we don't? I'm glad I closed my short positions on the session close yesterday, this was gonna screw me badly.

To summarize: short gold from 1281, stop is 1285. Target is new daily lows in 1270s.

— Petko Bankoff (@5koFX) November 7, 2016

This trade isn't gonna work, out on BE. I'm not willing to hold it overnight, having in mind that it's the election day tomorrow.

— Petko Bankoff (@5koFX) November 7, 2016

S&P500 Tenkan-sen Resistance

S&P500 respected the resistance on weekly chart - Tenkan-sen at 2132.

Near term resistance now is 2132. #SPX

— Petko Bankoff (@5koFX) November 7, 2016

S&P500 at Monthly Candle Top - What Could Go Wrong?

Right at the US election day, the US stock market average S&P500 futures (ticker: SPX) is residing at the top of the monthly candle. What could possibly go wrong here?

S&P500 HUUUGE Overnight Gap

I just woke up this morning with the gut feeling that there's something wrong and my feeling was right - the stock market average S&P500 opened with a huge 25pts overnight gap. The bulls are raging this morning, don't stand in their way!

Now I'm glad that I closed my short position on the end of Friday's session, I was gonna get badly surprised, should I had left it. Greed is not good, greed is bad (take this, Gordon Gekko!).

Short SPX here and now, target new lows. Rock n roll.

— Petko Bankoff (@5koFX) November 4, 2016

Moving the SPX short stop to BE now and going out to a bar to meet some people. See you guys mañana. You're welcome. Cheers!

— Petko Bankoff (@5koFX) November 4, 2016

Alright, taking profit on the short position, this is as far as it will go down today. 10pts for an intraday scalp is enough I am not greedy

— Petko Bankoff (@5koFX) November 4, 2016

Risk was 5pts by the way so the classic risk/reward of 1:2 is good enough for me.

— Petko Bankoff (@5koFX) November 4, 2016

P.S. I remember the times (good ol' times, when the markets were still operated by real people, not dumb, soulless machines, and when trading was a fair game of skills), when there was this broad, unwritten agreement between traders, that all gaps shall be closed. Unfortunately, these times are gone now, so I wouldn't advise anyone to fade this gap, moreover, there's the US elections tomorrow. Anyway, I am on watch for signs that Mr. Market is in the mood for closing the gap, so the short button is at one finger distance to me.

EURUSD - A New Bear Market Is Born

Today I would like to present to your attention the EURUSD monthly chart. Interestingly enough, despite all the tensions and the so-called "FX wars", whatever this means, the EURUSD exchange rate has gone pretty much nowhere since February 2015, when the market dropped below 1.21, which market the beginning of a new bear market, after a broad range of consolidation, starting in 2008. The market is consolidating in a narrow range between roughly 1.05 and 1.15. The ex. support at 1.21 has now turned into resistance, and technically, I see room for correction to test the 1.21 resistance. The downside is to be calculated once a short position is triggered, but it would be roughly in the 0.87s. Standing by, awaiting further development.

Gold Fibonacci levels (updated)

Here is the short term (H4) chart Fibonacci levels that I am paying attention to. As I previously wrote in a twitter post of mine, the near term bearish pattern is invalidated and I expect new highs in the 1350-1370 area soon. As you may see from the updated chart, after gold price surged above the 61.8% Fibonacci resistance, it came back to test for support the 50% and bounced back. Expecting new highs.

Gold; reversals and Fibonacci levels

With Gold breaking out above the 61.8% Fibonacci level and 200MA on H4, I believe we have a near term confirmed bottom. I see next stop in the 1350 - 1374 area. When in doubt, trust the charts - they don't lie.

Gold and the 50-day moving average relation

Something, that I am observing closely for the major long term trend in gold, is the 50-day moving average (50MA) on the monthly chart (MN). So far, 5th month in a row, gold is being pulled to it and is unable to choose direction. Which way will it go from here will shape this market for the years to come. Most people underestimate the simple 50-day moving average, but to me it is probably the most valuable technical indicator, and together with the 200MA they make for an extremely accurate, and yet simple, measure of market direction.

US defense stocks flashing bull trap: LMT, RTN, GD, NOC

In spite of the recent geopolitical tensions in the middle east, and the US elections, A few US defensive stocks caught my attention for potential longs, they're as follow: Lockheed Martin Corporation (ticker: LMT), Raytheon Company (ticker: RTN), General Dynamics Corporation (ticker: GD), Northrop Grumman Corporation (ticker: NOC). When I looked at them at first, they look like the perfect candidates to go long: well-established bull trends, no volatility, 80+% institutional ownership, low beta, good dividends and income, how not to love them? However, there's one thing that is common to all of them: the insiders are selling and this is to me the most important sign that there's something wrong with a stock, they always know something we don't.

Conclusion: there's no way I'm buying their positions, this all smells like a distribution at the heights of a bull trend, followed by sell off. And with the S&P500 on the brink of a sell off (see my previous post US stocks on the brink of a massive sell off), I see only one way for these stocks and it is down.

US stock market S&P500 on the brink of massive crash?

I don't follow the US stock market closely anymore, but I have to admit that it caught my attention recently, as I see the signs of an impending crash coming and I think it's gonna be of massive proportions, similar to 07-08. Here I am going to present to you the monthly and the weekly chart with my projections for the future price levels, followed by a brief explanation. For every market to make such a dramatic turn of events, such as a 30+% crash that I am expecting, there must be 2 things present: first, the market must be matured enough, i.e. it must have climbed substantially for extended periods of time and the majority of the market participants must be complacent and not expecting any major downside moves, and second, and most importantly, there must be a catalyst to spark the sell off, and what bigger catalyst now than the US elections? So here follows my charts that I prepared for you.

S&P500 monthly chart (MN):

Explanation: blue line is 50MA, orange cloud is Ichimoku Kinko Hyo; both provide support in a bull market and show the direction of a trend. As you may notice, the market climbed substantially away of both and even though the direction of the trend remains fairly bullish, I see room for downside correction to test the roughly 1800 support levels. Where it goes from there time will tell, it all depends on market participants' perception, when, and if, we get there.

S&P500 weekly chart (W1):

I am more aggressive in my projection on the weekly chart; I see a test of 1800 support, a weak bounce and then a more massive sell off towards 1300s. I think that the 1800 level is too tempting for way too many participants to put their stops right below it, and I know from experience that Mr. Market loves to hurt those, I think that a slight drop below this support would trigger a more massive sell off. Whether is gonna be the case is early to tell, we'll wait and see. I'll cover a few individual stocks of interest, that I follow closely recently on my next post.