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Bitcoin consolidation about to end soon
Bitcoin is approaching the apex of its triangle.
A decision and therefore a big move is getting imminent. But since
it now looks like a symmetrical triangle the breakout could happen
to downside too. So far Bitcoin behaves bullish but to make sure that
our winning trade does not turn into a looser we are moving the stop towards $382.00.
Action to take: Hold your Bitcoins and let your
winnings run. Don´t buy here.
Stopp Loss: Increase your stopp to $382
Profit Target: $800
Timeframe 6 -18 months
Initial Risk($80) / Reward($430) = 1 : 5.4 (very good
ratio!!)
Position Sizing: Don´t risk more than 1% of your equity.
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Midas Touch Gold Model neutral since March 14th
Compared to last week we have two new bullish signals:
SPDR Gold Trust Holdings
GDX Goldminers
And four new bearish signals are coming from:
Ratio Gold/Oil
Gold in Indian Rupee
Gold in Chinese Yuan
GDX Goldminers Sentiment
Overall the model has been moving between bull and neutral
mode during the last five weeks. Most of the time it´s been bullish. From a trend
following perspective Gold is still bullish in US-Dollar. But
the negative seasonal outlook as well as the very high commercial
net short position delivering strong bearish signals.
The model´s conclusion is to stay at the sidelines.
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Gold volatile range trading
Gold had a spectacular start into 2016 but since 11th
of February it is basically stuck in a volatile consolidation.
After breaking out of a pennant on march 3rd it failed to
push through the resistance zone between $1,270 and $1,280. After
a marginal new high last Friday a larger pullback
seemed to have finally started but with yesterday´s FOMC meeting the
bulls are clearly back and have been able to push Gold towards
$1,270 once again.
Basically all that Gold did during the last five weeks was drawing
in many new and speculative ETF buyers without making
any significant progress in its price while the commercial
hedgers have ramped up their shorts into this wild back and forth range
trading.
From a technical point of view this weeks pullback
has been the first and successful test of the new uptrend
line. If Gold indeed is running in this trend channel it should
not fall below $1,232 anymore. On the upside the next
target is $1,325. Note that
Gold remains short-term overbought for quite some
time already, but a young bull can stay overbought much
longer too. More concerning are the negative divergences forming
in the RSI and MACD. Also on a weekly basis Gold has not yet managed to
sustainably break out of the three year downtrend
channel which currently sits around $1,250. This makes
$1,250 a pivot point and its no wonder that we can observe such a
fierce battle here.
It would not be a surprise seeing Gold rallying until
$1,325 only to start a massive correction from there. But also a
whipsaw consolidation over the next couple of months is quite
possible. Another option would be a bearish rising wedge with another
marginal new high followed by a severe sell off.
Generally the most likely outcome will be a test of the
200MA until summer. That would mean a pullback towards $1,180
and maybe even $1,140. But so far there are really zero sell signals
and if you have missed the train you simply have to be patient and wait
for the chance to buy the next larger dip. I am pretty sure it
will come until summer. Another important advise is not to short this
market. A young bull will do everything to confuse and
kill the bears.
Action to take: Nothing. Stay at the sidelines but
plan to buy with both hands once Gold is pulling back towards its 200MA
($1,136). Practice patience!
Investors should buy with both hands if Gold moves below
$1,150 again until you have at least 10% of your net-worth in physical
Gold and Silver.
If you are afraid of missing out something you can
buy physical silver here, It´s cheap, hated and seems to have started a
new uptrend. It´s not as strechted as Gold and the
Gold/Silver-Ratio recently peaked at 84.
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Grains running into a falling wedge
Since mid of 2012 grains are in a massive downtrend. The
iPath Bloomberg Grains Subindex ETF has lost nearly 55%. But since
three weeks we are witnessing some signs of life with a first recovery.
The ETF is looking very promising here. RSI and Stochastic have not
confirmed the recent lows anymore. Sentiment and CoT are very
supportive while seasonality is sending mixed signals for
Soybeans, Corn and Wheat over the next 6 months. Optimism has been exceptionally
low with record bets against markets like wheat.
Short-term the ETF is in an uptrend and has an embedded Stochastic
on the daily chart. Therefore the uptrend is locked
in and likely to continue.
Action to take: Buy the iPath Grains ETF (JJG) below
$30.50
Stopp Loss: $27.50
Profit Target: at least $39.00 maybe even $48.00
Timeframe 3 -12 months
Risk($3.00) / Reward($8) = 1 : 2.7 (acceptable ratio)
Position Sizing: Don´t risk more than 1% of your equity.
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Portfolio:
- We bought Bitcoin at $372.
New stopp at $380. Profit target $800. Plan to
hold for a couple of months.
- Buy JJG (iPath
Bloomberg Grain Total Return Fund) below
$30.50. Place a stopp at $27.50 and plan to hold it for
at least 3 months.
- Buy Gold at $1.140 with a stopp at $1.100.
Mostly likely we will have to wait until spring/early summer for
this trade to become possible.
- Buy GDX (Market
Vectors Gold Miners ETF) at and below $15.45
with a stopp at $14.00
- Buy GDXJ (Market
Vector Junior Gold Miners ETF) at and below $21.15
with a stopp at $19.00
Watchlist:
Track-Record:
- We got stopped out of our gold
short position on January 4th at $1,083 for an outstanding
gain of $97/contract or 8.2% (=8.08R).
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Long-term personal beliefs (my bias)
- Officially Gold is still in a bear market
but the big picture has massively improved and the lows are
very likely in. If Gold can take out $1,307 we finally have a new
series of higher highs. If this bear is over a new
bull-market should push Gold towards $1,500 and Silver towards
$25.00 within 1-3 years.
- Long-term price target DowJones/Gold-Ratio
remains around 1:1.
- Long-term price target Gold/Silver-Ratio
remains around 10:1 (for every ounce of gold there are 9 ounces
of silver mined, historically the ratio was at 15:1 during the
roman empire).
- Long-term price target for
Gold remains at US$5,000 to US$8,900 per ounce
within the next 5-10 years (depending on how much money will
be printed..).
- Fundamentally, as soon as the current bear
market is over Gold should start the final 3rd phase of this
long-term secular bull market. 1st stage saw the miners
closing their hedge books, the 2nd stage
continuously presented us news about institutions and central
banks buying or repatriating gold. The coming 3rd and finally
parabolic stage will end in the distribution to small
inexperienced new traders & investors who will be subject
to blind greed and frenzied panic.
- Bitcoin could become the "new money"
for the digital 21st century. It is free market money but surely
politicians and central bankers will thrive to regulate it soon.
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Disclaimer &
Limitation of Liability
The above represents the
opinion and analysis of Mr Florian Grummes, based on data available to
him, at the time of writing. Mr. Grummes's opinions are his own and are
not a recommendation or an offer to buy or sell securities. Mr. Grummes
is an independent analyst who receives no compensation of any kind from
any groups, individuals or corporations mentioned in the Midas Touch.
As trading and investing in any financial markets may involve serious
risk of loss, Mr. Grummes recommends that you consult with a qualified
investment advisor, one licensed by appropriate regulatory agencies in
your legal jurisdiction and do your own due diligence and research when
making any kind of a transaction with financial
ramifications. Although a qualified and experienced stock market
analyst, Florian Grummes is not a Registered Securities Advisor.
Therefore Mr. Grummes's opinions on the market and stocks can only be
construed as a solicitation to buy and sell securities when they are
subject to the prior approval and endorsement of a Registered
Securities Advisor operating in accordance with the appropriate
regulations in your area of jurisdiction. The passing on and
reproduction of this report is only legal with a written permission of
the author. This report is free of charge. You can sign up here: http://eepurl.com/pOKDb
Hinweis gemäß § 34 WpHG (Deutschland):
Mitarbeiter
und Redakteure des Midas Touch Gold Newsletter halten folgende in
dieser Ausgabe besprochenen Wertpapiere: physisches Gold und Silber,
sowie Gold-Terminkontrakte.
Imprint & Legal
Disclosure
Anbieterkennzeichnung gemäß § 6 Teledienstgesetz (TDG)/Impressum bzw.
Informationen gem § 5 ECG, §14UGB, §24Mediengesetz
Herausgeber und verantwortlich im Sinne des Presserechts / inhaltlich
Verantwortlicher gemäß §6 MDStV
Florian Grummes
Hohenzollernstrasse 36
80801 München
Germany
E-Mail: info@goldnewsletter.de
Website: www.goldnewsletter.de
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