Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.
I thought this chart may be of interest to some of you as it shows two perfect textbook plays on the 4hr gold futures trading chart.
As you can see the first pattern is a reverse head & shoulders pattern. This is bullish and a breakout above the neckline would signal a buy point. Now if we use basic technical analysis with this pattern we can measure the potential move up by looking reverse head and shoulders pattern. You take the low of the upside down head $1075, and go straight up to the neckline at $1117. That is a total of $42. So if we add that $42 to the breakout point above the neckline then we can have a price target of $1117 + $42 = $1159.
As we can see the price of gold over the next couple days rallied to the $1160 level. Trading is not that easy but that is how it works in general. The hard part is knowing how to manage your trade and I scale out of positions as the price matures reaching short term resistance levels and by adjusting my stops accordingly to lock in maximum gains while minimizing downside risk.
A couple days later the same chart formed a regular Head & Shoulders and has since moved its potential measured move. I m not expecting a weak bounce in gold as with the overall stock market, but I am still not sure that the selling is over.
The “Weak’end Trading Conclusion:
In short, the market was turned upside down this week. Those who follow me should be in cash or mostly in cash as this drop was anticipated a few days ago.
Trading during fast moving markets is much tougher for swing traders as pivot points for indexes and commodities tend to happen during the intraday or during futures trading at night. High volatility like this is fantastic for active traders who focus on shorter time frames like the 4hr and 60minute charts, as opposed to trading just the daily chart and entering and exiting positions at the open and close each day.
I continue to watch the market and plan on providing some of these short term setups on the 4 hr chart using both the GLD etf gold fund and the YG Gold futures mini contract.
If you are interested in Trading Gold Futures and other contracts please join my Free Futures Trading Newsletter:
Gold Futures Trading Trend – 60 Minute Candle Chart
As you can see from the chart below gold has made a short term bottom and is trading at a major resistance level. The question is, does gold reverse and head sharply lower or does it break through the resistance level?
Could this be the start of a new leg higher or a C wave lower (ABC retrace)?
I hope it is an ABC retrace which is a bullish price pattern and it flushes out the weak positions before heading higher.
These are questions no one knows for sure but understanding where the current price is trading and that volatility could pick up very quickly in the next couple days is crucial. When volatility is about to increase managing your open positions or adjusting any possible new trades is an important part of being a successful trader.
Rule #1 Keep overall risk per trade low
If volatility is about to increase I usually trade smaller positions unless I am in the zone and feeling the markets each and every move.
Rule #2 Never let a winning trade turn into a loser
I scale out of positions a little quicker during volatile times to lock in a small profit (20-30% of position) which minimizes my overall risk. This also alleviates some stress as you now have a small profit and you feel good mentally.
GLD Gold ETF – Daily Chart
The daily gold swing trading chart is really starting to look attractive for a buy signal. Depending on what the US dollar does in the coming days will set the tone for gold.
We could see gold start to rally starting tomorrow or it will become volatile and start to sell off sharply in the coming days. Right now we have very light volume so any moves/breakouts cannot be taken seriously or with a large position.
If the dollar starts to rally we could see the GLD ETF drop to the $97.50 – $103 level.
Spot Gold Trend Analysis – 18 Day, 1hr Bar Chart
Starting in 2010 I will be providing futures trading analysis and signals so I thought I would provide a chart of the spot gold trend I have been day trading over the holidays.
This may seem like I am going against my #1 trading Rule – Never Trade Against the Trend, but the trend changes depending on time frame and trading style you are using. In short, gold reversed very strong 18 days ago just as we anticipated it would. The selling momentum was so strong it made for excellent gold futures day trading setups which I took advantage of over the past 10 trading days.
The chart below is of the 100 ounce gold GC Feb 10 futures contract which I traded. The chart is shrunk down and does not show my setups, nor does the chart look very sexy, but it clearly shows the direction of the trend and the BIG SELLING VOLUME.
The table shows my recent trades and if you take a close look all of the trades I did were Short Trades. Because the momentum and trend is down on this time frame I only traded perfect short setups (profiting from gold as it loses value).
Chris Vermeulen
www.GoldAndOilGuy.com – Gold Trend Analysis & Signals
The bulls were asking for it, leading with their chins a bit as they say. Newbies tend to buy high, panic early, buy back in abruptly and stupidly, and get taken down again in the normal overbought correction cycle. Its a greed-fear thing.
Now that the easy gains have been made, the bears start running into physical problems, and attempts to push down the price become harder to obtain and less ’sticky.’ Dips are met with buying. Its a funny seesaw really, with the price increases overnight when Asia and the Mideast buy, and the decline when Wall Street and the City of London move into action.
Remember, anything can happen. It’s not over until it is over, and we cannot say it is over yet. Still, the overbought condition has been substantially worked off, if in a rather precipitous manner. If one took the chart’s counsel to take profits on December 2, then the portfolio has cash to now buy back some trading positions. Remember we do not touch the long term positions while the bull trend is intact.
We are back up to 1/6 position, having made a small purchase at 1150, another at 1140, both with hedges for more downside, and a larger purchase at 1120. Now we wait, and buy weakness in dips to 1100 while the trend remains intact. There is downside risk to 1070, with the long term trend remaining sound. There really is no need to rush into this. Most markets look like they are rangebound at the moment. Waiting for a break makes compelling sense. No one knows the future.
We have taken the hedges off, at least for now, as holdings in miners are slight. Mining stocks are correlated with both bullion and the SP 500 and should be considered levered positions.
Unless the markets melt down which is not likely but which is always a possibility, the risk probability is much more favorable now. If you wish to guard against a meltdown, a hedge for a stock decline is easy enough to obtain. Watch your leverage. A change in trend is ALWAYS possible.
And if ‘traders’ come clumsily piling back into paper gold here, the trading desks will see it and skin them alive, charts or no charts. That is how markets overshoot targets.
A much more deliberate and long term approach to the markets is preferable for those who are not traders. That is about 90% of the people who read these blogs. For them, there should only be four or five trades per year, if that.
We have to look at all markets within the context of the economy in which they operate. As we have stated, our outlook for the real economy is still very gloomy. This is not a cyclical recession we are experiencing. We are in dangerous waters.
Gold Daily
Gold Weekly
The melt up in stocks on no volume was fully expected after the worst possible employment news to come in over 20 years: the market-economy disconnect is now complete, and all stocks are freeriding purely on Bernanke’s printing press. At least gold vigilantes are beginning to whisper in Bernanke’s ear he can go fornicate himself and his dollar destruction deathwish: let’s see what happens when gold melts up ala the S&P to 1,200, 1,300 and maybe 1,500 in a few short weeks: can you spell panic at the Fed? Also next up: failed auctions, the only question is when and by whom…Oh wait, those never happen right… yeah, until they do.
October Gold closed lower due to profit taking on Friday as it consolidates some of this week’s rally but remains above last February’s high crossing at 1008.70. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near-term. This week’s breakout above February’s high has opened the door into uncharted territory and the possibility of significantly higher prices later this fall. Closes below the 20-day moving average crossing at 980.30 would confirm that a double top with February’s high has been posted. First resistance is Thursday’s high crossing at 1024.70. First support is the 10-day moving average crossing at 1003.70. Second support is the 20-day moving average crossing at 980.30.
Precious metals like gold and silver appear to be forming a bullish pennant formation, which generally leads to higher prices. Currently the US dollar is hovering around a support level, which is the 76- 79 range. Only time will tell if the US$ breaks down sending gold to new highs in the coming months.
Below is a 4 month spot Gold chart
You can clearly see the pennant formation with gold nearing is apex. Soon enough spot gold prices are going to Blast off or Drop off. I continue to follow the charts closely as we near the apex for a low risk buy signal.
Below is a 4 month spot Silver chart
Spot silver price is forming a similar price pattern. Because spot silver is much more volatile the pennant is a little taller. Again we wait for a low risk setup.
Precious Metals Trading Conclusion:
Precious metals are slowly working their way to the apex of their large multi month pennant formation. In the coming weeks or months I expect to see prices spike much higher with everyone dumping their money into the safe haven GOLD & SILVER.
OR
When spot silver and gold prices start to break down from these multi month pennants we investors will start withdrawing our funds from precious metals at a very fast rate sending prices down.
As always, I keep focused using my low risk-trading model, which helps to alleviate the emotional part of trading during a time like this. Knowing that my down side risk is generally under 3%, this allows me to stay calm and focused. When a trade goes against me, it is not damaging to my account and I review what I have done to be sure I followed my trading system as planned. Losing trades happens all the time in trading, as it’s just part of the game. Knowing this, accepting it and keeping losses minimal is what separates profitable traders from the not so profitable traders.
If you would like to receive my Free Weekly Trading Reports or my Real-Time Trading Signals for ETF’s and Stocks please visit my websites at: www.GoldAndOilGuy.com or www.ActiveTradingPartner.com
