Markets

Bearish Chart Pattern Develops In Gold Trading

Tuesday,June26, 2018, 10:31 AM, EST

  • NASDAQ Composite +0.17% Dow +0.15% S&P 500 +0.16% Russell 2000 -0.07%
  • NASDAQ Advancers: 976 Decliners: 1200
  • Today's Volume (100 day avg) -6.8%

Markets opened slightly higher after yesterday's retreat although not much has changed in the news flow, good or bad. The Energy and Tech sectors were hardest hit and fell over 2% each, but both are also among the top performing sectors for the quarter and that suggests investors were taking profits while they can. Markets is Europe are fractionally higher today but Asian markets were generally lower with the Shanghai Composite entering bear market territory. Most sectors are higher this morning with Tech (+0.7%) and Energy (+0.5%) recovering while Financials (-0.7%) are off the most. Crude oil trades about 0.8% higher, treasuries a little higher as is the dollar, but gold is off 0.4%.

  • A bearish chart pattern has developed in gold trading , indicating that the precious metal is likely to extend a recent downtrend that has dragged it to its lowest level in 2018, even as signs of global uncertainty have intensified and should actually benefit the safe haven commodity. The current pressure has resulted in the 50-day moving average for gold prices , currently at $1,302.26 an ounce, falling below its longer-term 200-day moving average at $1,304.20. That forms a technical pattern known as a death cross, where the short-term trend line slips beneath the long-term moving average. Many technical analysts believe this death cross marks the area a short-term decline continues into a longer-term downtrend. Strategists have attributed the recent decline in gold to a dollar that has strengthened sharply against its rivals over the past several weeks, as the Federal Reserve, continues its plan to raise benchmark interest rates, which is ultimately bullish for the greenback.
  • Home prices continue their upward trajectory, advancing 0.2% in April or 6.56% YoY. That is less than expected and the smallest gain since July, but likely more sustainable in the long term. All twenty metropolitan areas in the index reflect Y0Y gains with Seattle leading at +13.1% gain, but for the month New York, San Francisco and Washington saw declines from March.

Technical Take:

On May 15 th gold saw a sharp decline down below the $1,306 level which had acted as a clearly defined support line throughout all of 2018. After four weeks of "bear flagging" immediately below this prior major support, now resistance, gold made another steep descent on June 15 th starting a run of seven declines in eight sessions. The recent decline made a death cross with the 50-day sma crossing down below the 200-day sma, traditionally viewed as a bearish signal. After gaining 8.1% and 13.5% over the last two years, gold is down 3.4% YTD.

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Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq's Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.