We expect major upheavals in the financial markets over the next few years. In this article we explain our cyclical framework for these challenging times and why you should invest in commodities now.
Published: 16th of June, 2021
6th of July, 2021 - by PreciousChartist
The following article has been written by PreciousChartist, a trader who has been trading very successfully in various markets for more than 20 years based on chart analysis. The article does not reflect the opinion of torck capital management and is not investment advice.
XAU/USD – Weekly
Over the past 14 years this is the second bull run we have seen. The initial trigger was an ascending triangle that took over 3 years to form. From the breakout moment onwards, I started to focus more on the Ichimoku cloud. The base line (blue line) was a very good indicator if the bull run will continue without any major setbacks. There was only one violation in March 2020.
After a 2 year up move, we have seen a clear violation of the base line in November 2020. Since that point, the line turned from support into resistance and prices failed to make new highs. This is the moment where the actual cloud gets some attention. First, the body of the cloud is still green, so the big picture trend is still bullish. First mild support should come in at the upper band of the cloud. But I rather focus on the lower band of the cloud in terms of support levels (which is the red line).
Since the price is still a bit away from the cloud, I will have a look at the price and time volume pattern on the right-hand side and the bottom of the chart. When we formed the latest ATH the volume spiked compared during the formation of the triangle but also during most of the rally. I would not label it as a blow-off top, but it showed some characteristics of that pattern. The price volume bars on the right-hand side help me to define ranges. Like the one I have drawn from $1670-1775. It indicates that in this price range a lot of trading has happened and that the price is most probably more sticky within that range.
In the current situation I see the level of $1670 as an important support. It has worked 2 times and triggered a strong reaction to the upside. It is also the lower end of the price volume pool. So, in case we break it the next support comes in at around $1575. This leaves me with the option to build up long positions within the range of $1670-1775. The stop should be taken if we print a weekly closing below $1670.
XAU/USD - Daily
It is more obvious on this time frame that the market is undecided if the overall bullish trend will remain or if we see a larger correction. Still, the call from the weekly time frame looks valid. The best entry level to establish a long position seems to be at around $1720 in my view.
XAU/USD – 4 hours
The down move sequences are looking strong. Those large 4 hour candle to the downside came with good volume too. Most of the indicators I watch are bearish on this time frame. There is a little uncertainty around the base line. The price is dancing around it (and currently above). A first bullish sign is the break out of the downward channel. In case you did not get any cheap XAU/USD at around $1720 you might need to enter at around $1775.
XAG/USD – Weekly
The overall picture is not as clear as it is on Gold. Also due to the high volatility I printed a line and a bar chart (especially for higher time frames a line chart is “cleaner”). I only see potential pattern but not a clear one. One is a bull flat and the other just a triangle. Both are bullish patterns. The price is dancing around the base line and currently just below it. Additionally, we are just below a larger liquidity pool (price volume pool). I have drawn a range around that liquidity pool $26.20-29.20.
I will feel a lot more confident on bullish positions if prices start to push into that range. Otherwise, I see potential draw backs into the region of $23.50.
XAG/USD – Daily
It pretty much confirms what I see on the higher time frame. A pretty wild zig-zag consolidation within that potential triangle. My confidence will rise as soon we push upwards through the base line which comes in at around $27.
XAG/USD – 4 hours
This chart looks bearish as long we are trading below the dotted line ($27). If we trade below $25.50 my next target is $23.75. The only bullish sign is that we are above the base line (blue line).
GDXJ – Weekly
We are in a mildly bullish environment. The potential symmetrical triangle looks promising with many touch points on both legs. But we have no clear picture which way this market is heading to.
GDXJ – Daily
Like mentioned in the higher time frame analysis. No clear direction and currently below the base line plus the body of the cloud is just turning bearish again. If the lower leg of the triangle is not holding, I am expecting a down move towards the range of $37-40.
GDXJ – 4 hours
Not much to add unfortunately. I see no bullish setup as long we are trading below the base line which comes in at around $50.
Summary:
