Gold futures are on a wild ride today; what’s ahead for it, and the rest of the markets? Is Today’s move a resumption of longer term trends, or is today a correction in newer trends? Insofar as everything is correlated these days, I mean is t equity and commodity trend back to up, the Dollar down, or have they reversed? Let’s look at gold futures.
Below is the daily chart for December Gold futures. Since breaking out of the triangle on Monday, gold paused on Tuesday. Tuesday’s range was 50% of Monday’s, giving a Breakout Method setup for Wednesday.
Held support, will it break resistance?
Yesterday was a breakout sale day in gold futures. On a breakout day, we look for the market to make a directional move-to open on one extreme and close on another. Recognizing breakout setups can give you a heads up for trade opportunities; it can also help you identify those days when countertrend trading is like trying to stand in front of a train. At the bottom of the post is a 10 minute chart of December Gold futures from yesterday. As you can see, opportunities to make money on the long side would be only for the nimble yesterday; a patient short sale was rewarded handsomely. (Read more about the Breakout Trading Method here).
Yesterday’s selloff ended in an interesting area. 1028.80 is a 50% retracement of the rally from the late September lows to the Oct 14th high at 1072. In that same area; 1025.80 was an old high from Sept. 17th; old highs often serve as support. The 50% area often serves as the line between a correction in an existing trend, and the last confirmation point for a trend change, so the hold at this price level was bullish.
The day after a breakout sale is often a buy day, as the previous day’s selloff is reversed. By George Taylor Douglass’ swing trading method, a “buy” day should see the market open near the low of the day, then rally over the course of the session, finally closing higher than the open. That certainly appears to be what we’ll end up seeing today.
Looking ahead, we’re at a short term crossroads for gold. To decide whether the rally will continue, I’m watching two price areas. First, 1049.50 is a 50% retracement of the selloff from the 1072 contract high. That resistance jibes with 1050 being a psychological resistance point. Clearing that would help the bulls; the 1055 area is another Fib resistance area, it’s also roughly the midpoint of the October congestion area.
Looking at the oscillators, the RSI/ROC has tomorrow as a “sell short day”. MACD is bearish; but I wouldn’t put a lot of store in it in the short term.
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit 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.
Trend day down
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