Gold swing trades – week of Feb. 29, 2016

Last week

1600226-Gold-priceGOLD spent the week consolidating recent gains, chopping around inside the triangle pattern mentioned in last week’s Preview. GOLD closed below the prior week’s closing, but above the moving average lines.

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Gold futures, Feb. 26, 2016. 60-minute bars

We did not see the kind of progress long-term gold investors may have wanted — the high for the week was only $14 above the previous weekly high and the close was $10 less that the previous week — but it was a good week for short-term traders using Nat’s calls.

The intra-week range was healthy enough to provide at least two good trading opportunities: The price broke above Nat’s key line early Monday and marked up almost directly to her first resistance level in Wednesday, a move worth $43  per contract to traders who caught it all.

More cautious traders may have waited for the price to break above the Pivot at $1220, but that move was still worth $30  per contract.

And after the spike top on Wednesday, some traders caught the retracement back to the pivot level, for another $30 per contract.

For traders who caught the full move for both trades, the potential weekly profit was in the range of about $7,300 per contract.

This week

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Gold futures feb. 26, 2016. Daily chart.

GOLD has been above the moving average lines since the buy signal given when the 20-day moving average line crossed above 50-day moving average line on Jan 25, 2016. So far the moving averages continue to suggest that the trend is positive.

The triangle pattern is usually treated as a bullish continuation pattern. But GOLD has a short-term extremely overbought condition.

If there is another major decline in the equity market, the price could move higher. Otherwise, GOLD may continue to stay inside the triangle pattern and continue going sideways.

$1210-12 is a key zone. This zone need to help $1220 level to hold GOLD pullback without causing too much damage.
If there is an upside breakout the upside break level will be $1256.50. A move above $1258.50 could push GOLD up to $1262.50-65 or higher up to $1287.50-85.

The downside break level will be 1210. A move below $1207.50 could push GOLD down to $1195-85 or lower to fill $1157.70 gap.

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