S-T Gold Failure First Step in Broader but Interim Bearish Count

November 30, 2017 9:22AM CST

The market's not unexpected failure overnight below our 1285 short-term risk parameter discussed in Tue's Technical Blog defines Tue's 1301.3 high as one of developing importance and possibly the end of the past month's 3-wave and thus corrective recovery attempt that warns of a resumption of Sep-Oct's downtrend that preceded it. In this regard 1301.3 becomes our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively base and manage non-bullish decisions like long-covers and cautious bearish punts.

Gold 240min Chart

Gold Daily Chart

From a longer-term perspective in the daily log chart above, it's easy to see the labored, corrective manner in which this market has tried to counter Sep-Oct's trendy, impulsive decline. Until threatened by a recovery above at least 1301.3 or negated by a recovery above 16-Oct's 1308.4 high and key long-term risk parameter, this bear market correction count warns of an eventual resumption of Sep-Oct's downtrend to new and potentially steep lows below 06-Oct's 1262.8 low.

Contributing mightily to this bearish count is the market's clear rejection of the extreme upper recesses of the past YEAR'S range on a weekly log close-only basis below amidst still-stubbornly-frothy bullish sentiment best indicated by our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC. COMBINED with the market's definition of "highs" and resistance above the market that can now be used as objective risk parameters to a bearish policy as well as very labored, corrective behavior on recovery attempts, we believe the extent to which the Managed Money community has its neck sticking out on the bull side will eventually provide the source of fuel for sharp downside vulnerability that could see the 1200-area in the weeks and months ahead.

These issues considered, a bearish policy remains advised for longer-term players with strength above 1301.3 required to pare exposure to more conservative levels and subsequent strength above 1308.4 required to jettison the position altogether. Shorter-term traders whipsawed out of a bearish policy weeks ago are advised to return to a bearish policy and first approach recovery attempts to the 1293-area OB as corrective selling opportunities with strength above 1301.3 required to negate this specific call and warrant its cover. In lieu of such strength we anticipate lateral-to-lower prices in the days and weeks ahead that should not surprise by eventual accelerated losses and a break below the past couple months' key 1263-area support.

Gold Weekly Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.