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China Trade Deal Optimism Sinks Gold, Sends Equity Futures Flying

CEO Technician
Posted Oct 13, 2019

S&P futures are up 27 points and gold futures are down $10 as I write these words. The culprit? China trade deal optimism as high level talks between the US and China continue for a 2nd day in Washington. CNBC even went as far as to analyze the amount of time Liu, Lighthizer and Mnuchin spent outside the building before entering, in order to give the cameras ample photo ops. Certainly that must be bullish, right?

Remember that we've been here before, there have been other Fridays in which the market was badly disappointed by the Chinese delegation leaving early with no deal. 

For whatever reason the market seems to think that this Friday is different. Perhaps it's because everything is crumbling around Trump and the salesman President would love to have something to cheer about, anything, even a shitty trade deal with a country he's chastised and mocked on his famous Twitter account. 

From a technical vantage point $1480 is an important support level for gold, with the October 1st low at $1465 representing last chance support before a much bigger correction would ensue for the yellow metal:

(Click on image to enlarge)

The recent stalling around the 50-day SMA and the Daily-RSI(14) median line is indicative of a market that is still within a digestion and base-building process. Gold needs some more time to set up the next leg higher, it's really as simple as that. This is normal and healthy bull market action, and this process could play out for another 3-4 weeks before we see that next uptrend begin to take hold.


CEO Technician
email: ceotechnician@gmail.com
website: tradinglab.co and

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