Forecast - 2013 05 24

IS THIS THE RIGHT MOMENT OF THE "BULL"?

For the past few weeks, we've been watching how the Bear beat the Bull so hard.
The drop of the gold price is the the worst drop ever for the last 30 years. Nobody knows exactly what the true reason is. I will not try to look for the reason, I just want to try to predict the next move of the gold.

Let's start....

Analysis No.1

This is my gold weekly chart. It is a plain chart with only RSI and William % Range in other window.

Many traders often underestimate these indicators and consider them as lagging indicators. Yes it is, IF, you are a short term trader, but not for medium or long term trader.
I love these indicators because they tell the condition of the market, whether it is overbought or over sold. Of course I will not make the lesson about these indicators here, just googling and learn it by yourself.
The point is, when the market is overbought USUALLY the price will going down, and vice versa, if the market is oversold USUALLY it will then going up. If you don't believe me, just look carefully at the chart above and you can notice that both indicators tell exactly the same.
Now, please look carefully from that Weekly Chart, RSI (the red line) is in the extreme OVERSOLD area (under 30). The last time weekly RSI in this oversold area is in the September 1999. Almost 14 YEARS AGO !!!
The William % Range (with different algorithm to calculate overbought and oversold, but similar result), also in the extreme oversold area.
Both indicators point that this is a set up for bullish.
Wait a minute!!! Of course I know your objection. When these indicators are in the oversold area, such as this moment, it is not automatically show that the price will go up instantly. I know there is an exception. In a very strong trend, as can be seen in the same chart above, these indicators, sometime, can stay in the oversold area but the price is keep going down, and vice versa. Yes, I know that.
But please judge by yourself, are we in a very strong bearish trend now?

Analysis No.2

Silver - weekly

Gold - weekly

Let's see Silver and Gold weekly chart. If today (end of week) closing, silver and gold price doesn't go much lower than current-chart-low, there's a probability that it will make a Morning Star pattern.

Analysis No.3

This is the most convincing data that I have so far.

Look at the chart above. That is the weekly chart with 2 indicators, the Open Interest and the Commitment of Trader. Both data are official data from US CFTC (US Commodity Futures Trading Commission), the official US government bureau that collect weekly commodities data, including gold, from all US market.
I will not share how to use these data here. For those who has known the important of these data in the trading will know what I mean. (Please find a way to get assistance from around you to  learn how to use these as it is impossible to share the knowledge here).
The point that I want to show  here is, that we are having the similar conditions compare to the end of year 2008 when gold begun a long rally.
The Open Interest shows the lowest figure (significant drop in the last 2 weeks) and the Commercial shows the highest figures, both since the end of 2008, when the gold rally begun.
Why it is so important? Because the Commercial is the market mover. No one can beat them, not the large trader nor the speculators.
Both indicators show the set up for a bullish gold price. Of course it doesn't mean the bullish will happen tomorrow, but the most important thing is, we already have the signal that a bullish setup for gold is near.
Just be prepared .

Analysis no.4

One of my favorite traders is Larry Williams. Actually, I learn about COT, Open Interest, and many more indicators because of his book, Cracking The Money Code. I found it very helpful and logic. Some of his secrets of being successful trader is because he use the reliable and valid data. So trading is not only about luck. It is about what reasons you have to make a smart speculation.
One of his tools is Advisory Sentiment Index. Sorry I don't have anything to show here about this tool.
The point is, when most of the advisers, media, brokers, anyone, are bullish then probably we are already in the market top. Vice versa, when most are bearish, probably we are already in the bottom of the market.
Now, let's think about it, how many experts or people have you heard are bullish about gold lately? None?
Yup... Everyone is really bearish at these moment. Is this a sign?
You decide....

My Conclusions

Yes, I'm begin to be bullish at this moment. Now I'm preparing myself to face at least a significant correction of the gold price (and also silver) if we can't say a rally.
Of course as I say earlier, it might not happen next week. It might happen next month. It might also the gold price can drop further. But at least, the set up for bullish conditions is already there.
Always use a good money management and discipline.
Wish all of you have nice profit.

Note: Disclaimer always ON.


GG - 2013 05 24