Gold futures had a big rally today. The past three sessions were dojis (the open and close were roughly the same), and the three ranges were nearly the same. In addition, yesterday’s range was the smallest of the previous four sessions-my favorite pattern to look for to identify breakout candidates.
The daily chart for December gold futures is below. I circled the three previous sessions; the consolidation is clear to see. I added the Fibonacci retracement levels to the recent selloff to get some ideas for rally objectives.
The breakout pattern is circled
Next is a 10 minute chart for December Gold futures for today. I drew blue horizontal lines at potential breakout buy points. ToF is Trade or Fade, a service I produce for breakout trading.
The red and green horizontal lines are rally objectives. Note that the first rally stopped at the Fib resistance of 1005.70. The selloff from this rally gave a second opportunity to buy, and the second rally accelerated when that high was taken out. 1010.40 was the next Fib rally objective, and 1010.80 was Trade or Fade’s rally objective.
I circled the action between 12:00 and 13:00-the second push was unable to take out the day’s high, which led to a selloff. This failure to make a new high was a signal to take profits on remaining long positions.
10 minute gold chart
For more information on trading breakouts in futures, check out my Breakout Futures Trading Method book here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
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