Originally published by Chamber of Merchants
My aim is to help the retail trader community think better. To be in an ocean without a lighthouse is no fun, therefore I aim to share some of my insights and observations so that, hopefully, it may aid in decision making. I’m no guru, I have no crystal ball, but I do have a certain approach to trading. That approach mainly relates to overcoming our inherent weaknesses such as greed, fear of missing out etc… So I share this with the hope that it will assist you by being more informed. That doesn’t mean I am right, but the observations I make this morning should be taken into consideration as part of your many considerations.
This morning I’ve woken to 3 immediate alarm bells for anyone with a long trade in the precious metals sector.
#1 Reversal Candle on the Gold daily chart
Basically, there was a strong rejection of gold at $1206. I did mention in yesterday’s post that I expect strong resistance and a possible reversal around $1205-$1215. According to the chart above it was rejected at a moving average level.
#2 Silver gave back it’s gains and now sits at support
Silver took a long time to move to the upside. And it gave it back in one day. This is a cautionary signal to me. If silver starts breaking lower back to $16.50 then I would expect gold to shortly follow suit down to a support level of $1172 or even $1164 if momentum overshoots. (Not certain, but worth considering.)
#3 US Dollar Bounced off support
The dollar has not confirmed its decline. This means that generally, gold has not confirmed that it will rally further.
Therefore, while the above are merely observations, I would proceed with caution. That means again, taking some off the table or ensuring I have stop losses.
One can always re enter once the coast is clear.
As for me, I am still out, waiting to enter at a support level where I can commence my next trade for 2017,