Last week
Gold futures, prices for week ending Sept. 23, 2016
Gold surged sharply last week after the Fed Open Market Committee minutes were released on Wednesday, and the subsequent press conference from the Fed Chair. The Fed kept interest rate unchanged, as expected, but that was enough to prompt an up move in GOLD.
Last week’s trades
Gold futures, Sept. 23, 2016. 60-minute chart.
Gold and equities were dead for the first three days of the week, waiting for the minutes of the Fed Open Market Committee to be released on Wednesday afternoon.
Gold futures traded inside a $10 range (the red area on the chart) fluctuating around Nat’s pivot level on low volume.
Before the FOMC minutes were released, the gold futures made a pattern that is very typical around news releases: a sharp movement in one direction. primarily to capture stops, followed by a sharp continuing move in the opposite direction. In effect, a head fake in one direction. followed by the real move in the other.
That kind of move often takes out stops before continuing. To trade it you need to set stops wide enough to avoid the fake move, or be prepared to re-enter the trade if stopped out. Note that the head fake started in overnight trading, and stopped above the previous eek’s low and above Nat’s key line.
Once the true move started, it continued for about $27 from Nat’s pivot, with easily-taken exits at the first resistance, Nat’s first sell level and the second resistance. Traders who held the position until the second resistance were rewarded with a gain of about $2,700 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, Sept. 23, 2016. Daily chart.
Wall Street’s jawboning about a rate hike at the Fed meeting was louder than usual, and the openly hawkish dissent by three Fed FOMC members is increasing the noise level.
With the US presidential election coming in November the Fed is unlikely to take any action until the December meeting but the uncertainty (and potentially the volatility) is increased. All this affects gold.
$1330-33 will be this week’s key zone. A break below it could trigger a stop run and push the price back down to test last week’s low area.
Holding above that key zone could have two outcomes: a continuation high move to push the price up to $1357-62.50 or higher – if GOLD can manage to break through the $1352 level; or a sideways move within the $1348 to $1330 price range if GOLD fails to break through $1350.
Based on the daily chart, since July the GOLD futures have been holding price above the three-month support line, and under the long-term trend line. A short-term consolidation pattern has been formed. GOLD is likely to continue this consolidation pattern this week.
Therefore we still should expect $1360-65 long-term downtrend line area will stall GOLD from advancing and $1315-10 (the three-month support) support will continue to prevent GOLD from falling.
The daily PMO indicator has a early ultra-short-term buy signal, but the weekly PMO is not so encouraging for the intermediate term.
For traders, buy on pullbacks and sell on rallies for day trading with protective stops in place.