Gold swing trades – week of Nov. 28, 2016

Last week

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Gold futures, week ending Nov. 25, 2016

Gold broke down the neckline of the bearish H&S pattern at $1205/1199. That neckline had been a major support line since Feb. 2016. Now it is broken as the US dollar surges to 13-year highs. The breach of support occurred on thin pre-holiday trading. But volume was heavy on the selling side.

Last week’s trades

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Gold futures Nov. 25, 2016. 60-minyte bars.

The Thanksgiving Holiday in the US disrupted trading in Gold futures last week.

US stock markets were closed Thursday and only open half a day Friday, which means most traders took a long weekend starting Wednesday afternoon.

The gold futures traded in a narrow range around Nat’s weekly pivot while the markets were operating normally, then crashed $50 on thin volume over the holiday.

Last week Nat’s traders had two distinctive entry points: the break below her weekly pivot and the subsequent break through her keyline. That second breakdown, combined with the failure to hold the $1200 support level, was an unmistakable signal.

The exit was at the second weekly support, or lower.

The trade required members to enter their orders before a long weekend, and some preferred to stand aside. The traders willing to place their orders and wait for the trade in the overnight market were rewarded with profits that ranged from $1,800 to $3,200 per contract.

This week

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This section contains the specific buy/sell levels for this week. It is reserved for paid subscribers. Previous weekly swing trades are available free of charge in the archives.

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Gold futures, Nov. 25, 2016. Daily chart.

GOLD broke its Bearish H&S pattern, and had a continuation low. The price action was bearish, and the declining move could continue until Gold completes the full measurement of its broken pattern (see chart).

The $1205/1199 zone could be retested once this week if $1179.40-1181.40 – a broken support zone last week – can be restored as support in the early days of the week.

But as long as Gold  stays under $1205/1199 zone, the outlook remains bearish. Even if the price has a further bounce up to $1235-45 zone, it will meet new sellers as long as price closes under $1200 level on a weekly basis.

How far can GOLD go for? Based on the pattern breach, $1145 and $1092 are the measurement downside targets. The FOCM will meet on Dec. 12, and the anticipation of a rate hike and a continuing strong dollar could send GOLD towards those destinations.

Short-term and medium term indicators are bearish, and have extremely oversold condition. The long-term indicator continues in a selling signal, but still has room to go down to oversold territory. We may see some brief oversold bounce, but this kind of bounce will not change the short-term downtrend.

Short on key resistance if a bounce occurs this week.