I wrote about gold futures a few days ago (read the post here). It had the rally I was looking for; let’s revisit it to see what may be coming.
I circled Friday’s bar. It was a narrow range day and a doji; this meant we were looking for a breakout trade yesterday (read about breakout trading here). We did get a breakout rally yesterday; it stopped at broken trend line resistance of 1065.40 and retreated.
Markets often reverse course the day after a breakout move. Today was no exception. Gold traded around unchanged early in the session, and the broken trend line was resistance again (it was at 1068.90 today). It subsequently sold off, and is now testing trend line support at 1055.00.
Looking ahead, I still think that gold futures may be topping out. If today’s high holds, it will have made the 123 top I pointed out in the chart. The low of 10473.70 is the key level on the downside. Taking that out would confirm the 123 top. In addition, MACD is getting closer to the bearish crossover I pointed out on the 16tth.
If you’re a gold bull with a longer term perspective, I’m not saying that this would necessarily be the top for gold. 1039.50 and 1029.50 are Fibonacci retracement levels for this last rally, and 1028.00 is the old contract high for December gold futures, so a selloff might be an opportunity for longer term traders to accumulate gold for a new leg up.
Is a top forming?
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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