Gold swing trades – week of Oct. 31, 2016

Last week

161028-gold-prices

Gold futures, week ending Oct. 28, 2016

Gold rose 1% to the highest level in four weeks for Friday’s closing. Later it extended gains after the FBI said it would further investigate Democratic presidential candidate Hillary Clinton’s use of a private email system.

Last week’s trades

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Gold futures, Oct. 28, 2016. 60-minute bars.

The major trades last week were bounces from Nat’s pivot line around $1265.The market kept returning to this level throughout the week, and there were at last three good opportunities to enter at that price.

The exit from the first trade on Tuesday was not very well-defined. The price failed to reach the next expected level, Nat’s keyline at $1276-78 or the first resistance at $1279.

Traders who guessed that the price would not reach that target could exit the trade at a lower price and still make a profit of about $10 per contract (worth $1,000); others would see their profits dwindle as the price returned to the entry level.

But on Friday the price moved directly from the pivot to the target — and well beyond it — in a matter of a few hours. Traders who captured that move banked profits of $13 per contract, worth about $1.300 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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161028-gold-daily

Gold futures, Oct. 28, 2016. Daily chart.

Eleven days before the U.S presidential election. Lots of uncertainties about the final result will persuade some investors to stay in the safe harbor. At the same time, the stronger-than-expected GDP may give the Fed a chance to pull the rate hike trigger sooner rather than later.

But the possibility of a 25bps rate hike has already been absorbed by the recent pullback in GOLD and investors are realizing that it will take a long time for US interest rates to go back to “normal.” The sentiment could help hold the Gold price up this week.

Based on the pattern on the daily chart, Gold still should be enjoying a short-term bounce. The price could continue moving up and reach $1293-89.50 or higher up to $1300-05 if the buyers can manage to hold the price above last week’s low area $1260.

Daily PMO indicator has a buy signal in oversold territory, which is good for the short term. But it continues to hold a Sell signal on the weekly chart and doesn’t offer much confidence for the long-term.

This suggests that the right shoulder top of the daily H&S pattern could be formed this week or next week before the election, but as always in a H&S pattern there is a chance the price will drop again afterwards.