Gold price still has upward momentum in a down trend

As mentioned previously, EMA21 created some resistance on the upside and for the last several days has continued to do so.

There is still upward momentum showing on the daily chart, so a break above nearby resistance at 778. is not out of the question. However, as far as trend is concerned, the downtrend as indicated by the slope of the 60 day Moving Average is still decidedly down.

There is also the possibility that a decline below 721 will trigger some intense buying which could push gold up to 780. or even 800. A move higher than these figures is unlikely until the October 24th low of 681.50 is tested or exceeded to the downside.


Gold chart as at 6 November 2008 using NextVIEW Advisor

TECHNICALS

NextView RSI – declining below its’ 50 line.
Stochastic – rising
60 day Moving Average – sloping down
21 day EMA – currently containing price on the upside.
Bollinger Bands – contracting – evidence of a stall in the trend.

R1 – a resistance zone between 783- 820.
R2 – 931.50
S1 – support at 681.50

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

USD/CNY downtrend continuation likely

US Dollar Against Chinese Yuan (USD/CNY)

It may be too early to forecast a continuation of the downtrend with this currency pair, but in fact, near term, that is the most probable development.

The October low at 6.7737 will be the first price target to the downside. A close below that level will target 6.7746 and then 6.7109.


USD/CNY chart as at 6 November 2008 using NextVIEW Advisor

TECHNICALS

Stochastic – dropping from Overbought levels
MACD – dropping below its’ zero line into bearish territory.

R1 – resistance at 6.8405
S1 – the first level of support at 6.7737
S2 – the second level of support at 6.7450

***
Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

EUR/USD expected to go lower

Euro Dollar against US Dollar (EUR/USD)

Last week I suggested in this column that there were two outstanding possible scenarios that may help us interpret current price action on the charts, and how that helps us to forecast major directional change over the next few days and weeks.

Scenario #1 in brief – that the down move will continue, but that downward and sideways action over the next several days was probable.

Scenario #2 – The correction is complete and the market will continue to rally to test the July 8th high.

I continue to favor Scenario #1, and that is primarily because of the price pattern on the chart rather than any particular technical or fundamental indicator. The market has indeed moved down and sideways during the past several days. Neither the low of Oct. 28th nor the high of November 2nd has been surpassed.

There is even the possibility that a triangle pattern is forming in this consolidation which, if it occurs would imply several more days of tight range movement.

Whatever pattern eventually emerges from the consolidation, it is most likely a wave four in Elliott Wave terms, and the outcome of a wave four pattern, in this case, should be an eventual break of the low at 1.2326 with a near-term price target between 1.2000 – 1.1700.

A rise in price above 1.3881 before 1.2326 is exceeded to the downside would cause a change to this outlook.


EUR/USD chart as at 6 November 2008 using NextVIEW Advisor

TECHNICALS

R1 – Nearby resistance at 1.3298.
R1- 1.3881
S1 – Nearby support at 1.2317
S2 – downside targets from 1.2000-1.1700

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Can we depend on our Leaders to handle our economy?

Malaysia is not going into recession next year... economy fundamentals are strong, says our up and coming PM. But what is happening now, Mr. PM to be cum Finance Minister, does not seem to look like it...

RM$5b "bailout" loan to State investment company, ValueCap Sdn Bhd from EPF to invest in the stock market. ValueCap owes its three shareholders RM$5.1b. The move was highly questionable. Deputy PM, now Finance Minister defended the move by saying that ValueCap has good performance record. Then why the hell do they need the RM5b loan if the they performed well.

Goverment spending RM$42b in September to defend the Ringgit... Wow. Again Mr. PM to be, why do we need to spend so much to defend our Ringgit if the economy is fundamentally strong? Haven't we learned something from the Asian Financial crisis? Oh.. I forgot, your right hand man (Finance Minister II) is a gambler and he once lost big during the Asian financial crisis. Like all gamblers, revenge would be sweet... our sour. I just hope we would need to get assistance from World's loan shark, the IMF in the near future.

And recently RM7b stimulus package to strengthen the economy and boost confidence within the private sector. I am OK with this, but I always fear the implemention part and our government has very good track records for this.. remember all the development corridors? from south, north, east, west , heaven and earth... what happened to them? I am sure money will be syphoned out of the package. YAB PM to be.... tak cukup lah (not enough).

Our current PM says price of goods MUST fall, now that price of oil has declined... but who is listening Mr. PM? Last time I checked, prices still the same. In fact, some vendors still has the gut to raise prices even now...Inflation to come down? Domestic Trade and Affairs minister said that there is no guarantee that price of goods must come down.

Bahhhh... But I must salute him for changing his finance minister portfolio with his deputy because he knows that he do not know anything about finance and economy. I am not sure whether the deputy knows about the economy or not but I only know his brother is a great banker.

Can Malaysia depend on Finance Minister II?.... He's a gambler. What if Malaysian currency continues to depreciate? Gamble more? His hands must be itchy after 11 years.

No wonder the opposition walked out of parliament in protest.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.

Buy Commodities....

and the US Fed should shut down... "Legendary Investor" Jim Rogers interview on Bloomberg. Jim Rogers also mentioned previously that government bailouts will cause hyperinflation. He's right many times...



Price of major commodities from early 2008 to current time (17:20pm +8:00 GMT):


Charts created from NextVIEW Advisor Professional

N.I.N.E.

Kuala Lumpur Composite Index (KLCI): Strong down trend

Once again, the KLCI easily broke the immediate support of 950 points and plunged to its lowest low since June 2004 at 801 points before rebounding immediately. Despite this, the Malaysian market was less volatile than other equity markets. The government has repeatedly given assurance that the Malaysian financial market exposure to the current financial crisis is minimal but investors are still concerned. Inflation has not really declined despite lower commodity prices and weaker currency adds more weight to the concern.

The down trend remains resilient and the currently the KLCI level is way below the average at 863.61 points while the short term 30-day average is at 950 points. Momentum indicators are indicating that the down trend momentum is strong and therefore the KLCI may decline further. If the KLCI goes lower than the 801 points low, it may find the next major support level at 600 points. The current immediate resistance is 950 points and is the KLCI is able to break and stay above this resistance level, a sideway correction is expected.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.