Earlier this morning I posted a ‘tweet’ on Twitter that I thought February Gold futures could rally if they took out 1095.70, last Thursday’s low. They took it out, but fell back. Let’s take a look at it.
The daily chart is below; I drew an arrow to last Thursday’s low. I based the rally thesis off the action after Dec. 11 low. That low was broken on 12/17; the subsequent rally back above there rallied about $10 /oz. I was anticipating the potential for the same action when it regained the lower low.
click to enlarge
However, the rally fizzled. There is stiff resistance a bit higher that’s a bigger impediment to an extension of the rally. First, 1098.00 is a 50% retracement of this week’s trading range, and 1098.20 was yesterday’s high. In addition, the trend line off the past two swing highs came in at 1098.70 today. All this adds up to saying that 1099 to 1099 is tough resistance, and it will need to be clear that to open the door to a bigger rally.
What should we expect tomorrow? Assuming nothing crazy goes on the rest of today, we have a breakout setup for tomorrow, as today was an inside day and a narrow range day (an NR7 day) (for a detailed discussion of breakout trading get my eBook here.) The question will be whether anyone wants to stick their neck out on Christmas Eve, especially with the bad weather for the Eastern half of North America.
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.
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