Gold 1 OZ (XAU=X) Bouncing, Not a Bottom

Gold 1 OZ (XAU=X) Bouncing, Not a Bottom

Gold 1 OZ (XAU=X) Bouncing, Not a Bottom

The breakdown of the head and shoulder pattern was interrupted Tuesday when ISM manufacturing struck a 10-year low. Gold reversed immediately and the stock market plunged. Futures are back above $1500, but the technicals and Commitment of Traders (COT) suggest the yellow metal is yet to make an intermediate low.

GOLD COT UPDATE: Typically, we see at least a 50% reduction in commercial shorts from the cycle peak to the 6-month low. Throughout the prior 10-week correction (February to May), shorts dropped from -166,477 to -57,396. Before I expect the next 6-month low, I’d like to see commercial net shorts near -170,000 or lower (currently -303,688).

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1,536.05.

The projected lower bound is: 1,451.43.

The projected closing price is: 1,493.74.


A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 70.0146. This is not an overbought or oversold reading. The last signal was a buy 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 47.28. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 28 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -27. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.


The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -11.924 at 1,492.426. Volume was 8,900% above average (trending) and Bollinger Bands were 43% narrower than normal.

Open     High      Low     Close     Volume___
1,504.5051,509.2211,489.6851,492.426 59,174
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,498.91 1,501.14 1,366.07
Volatility: 19 18 14
Volume: 5,917 1,183 296

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.


PREC.M.XAU= is currently 9.2% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume out of XAU= (bearish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 18 periods.

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