Gold and crude bear market rally

Gold is testing resistance at $1500. There has been much discussion in the media of strong buying of physical gold, but this is not confirmed by the chart. Gold now presents a strong setup for a short trade. After a reasonable bear market rally, price is now consolidating below resistance at $1500. Breakout below $1450 and the rising trendline would signal another primary decline, testing  primary support at $1320 but with a target of  $1150*.

Spot Gold

* Target calculation: 1325 – ( 1500 – 1325 ) = 1150

Crude Oil

Nymex WTI rallied sharply on Thursday — ahead of stocks and bond yields — but is likely to encounter resistance at $100/barrel. Respect of resistance would signal a decline to $85. Breakout is less likely, but would suggest an advance to the 2012 high at $110/barrel.

Brent Crude and Nymex Crude

* Target calculation: 99 – ( 106 – 99 ) = 92

10 Replies to “Gold and crude bear market rally”

  1. I have noticed looking at the GLD ETF that the rally has been on relatively small volumes. However, I am wondering who actually determines the spot price for gold these days? It seems to me (and I’m no expert) that the ETF is now acting as the de-facto spot price??

    1. There is no one spot market for gold. The feed we receive provides bid and ask prices from major dealers, as collated by Morningstar in London.

  2. I agree with you, Mr. Twiggs. 2 huge red candles followed by many small green ones – a classic bear correction. There’s no volume at all, this market is moving on thin air, I expect it to crash any moment. In the mass medias circulate the speculation that chinese wives buying jewelry drive the prices up and will continue to drive them. What a joke…

      1. My line in the sand to sell is a break of 1440. The price is already below the 50SMA on 4-hour timeframe and the Money Flow ORG is showing no money inflow at all on the hourly charts so it should continue down.
        However, there is something that concerns me – I have exported you a chart and tweeted it to you where you can see a bullish Money Flow ORG divergence on the weekly chart. It seems like a fake divergence to me because it’s not confirmed on any other timeframe and I don’t see any buying pressure judging by the price action. What do you think about it, Mr. Twiggs? I tweeted the chart to you yesterday from my twitter account
        I want to tell you that I love your Money Flow oscillator, it’s the most useful techhnical indicator I’ve ever used, I can’t go on without it anymore. The most important thing in a market is wether the people are buying or selling and this is where Money Flow ORG comes in use. It’s much better than the Accumulation/Distribution indicator from which it’s derived.

      2. Thank you. Where is your data from? I can find nothing to confirm that on SPDR Gold [GLD_us]. Also what time frame is the Twiggs Money Flow?

      3. The divergence is on the weekly chart of Gold Futures (GC_F) and is showing on 3 different brokers’ MetaTraders that I have installed on the computer.

      4. Weekly divergence is a strong signal. But this is not repeated on GLD.
        SPDR Gold
        Nor does the Gold Bugs Index ($HUI) show signs of a bounce.

      5. I think that this Money Flow weekly chart divergence could be caused by the hedgers buying futures contracts, according to Kitco they’re heavily buying, which means that this market is most likely to continue downfall.

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