Gold swing trades – week of Oct. 10, 2016

Last week


Gold broke its neckline (at $1311) of the double top pattern . It triggered a pattern breakdown and pushed price down to complete its full measurement at $1244.70 within 5 trading days.

Last week’s trades


Gold futures to Oct. 7, 2016. 60-minute bars.

It was a tricky week for gold traders, with a breakdown through the long-term support at $1311 leading to a $67 per contract move.

But capturing all of that profit required ignoring some of Nat’s short-term buy levels and interim support and concentrating on the longer-term analysis.

The first significant activity was the failure Tuesday to reach either the pivot level of Nat’s keyline, followed by a sharp drop through the long-term support ($1311) reaching (and passing) Nat’s 2nd buy level at $1274.

As Nat said last week:

The short term support at $1310-$1300 has been tested three times before, and is likely to break down at the next test.

But the next support ($1280-75 and $1250-60) is very close and there is a big chance for GOLD to bounce from it. … $1260/1245 is long-term major support area.

Which is pretty much what happened.

Traders who recognized what was going on — the breakdown of long-term support, fairly obvious to those monitoring the market in real time — were able to capture about $37 per contract in Tuesday’s move.

Those who kept their positions open waiting for the full anticipated move, noted in Nat’s earlier commentaries at around $1244, were able to capture about $67 per contract, worth $6,700 for each position.

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 to Oct. 7, 2016. Daily chart.

Gold has fallen out of favor lately due to the possible interest rate hike by Fed and the strong US$. The correction could be deeper than we expected.

But after 10 of 11 days of short-term declining, GOLD starts to have a short-term oversold condition. A brief bounce should be seen.

But this kind of brief bounce will not change the short-term downtrend direction. Sometimes short-term oversold can gets more oversold until the intermediate- and long-term charts also become oversold before the price can rally again.

Therefore, any bounce in short-term will be killed by sellers as long as GOLD stays under $1316 level.

This week, $1278.50-85 will be a key zone. A move above it could lead GOLD up to test $1293-95 or higher $1310-05 (the broken neckline of the bearish double top formation).

A stay under $1278.50-85 will continue to give a bearish outlook for GOLD, suggesting a further toward the next neckline of a big potential intermediate-term H&S pattern near $1200-05 level.

Nevertheless, a short on those testing levels should be used for short-term trades. Scalping on the long side with protective stops is also expected to be attempted by day traders.


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