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Potential 'Long' Gold Trade

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20 minutes ago, dmedin said:

 

14th May, it looked like gold had broken out of a continuation-style triangle and previous trend was up, I bought on the pullback to the dotted (original) line, but instead of going back up it sank back down.  The MAs looked good too.  Sadly it wasn't to be that time :D

 

gold.thumb.jpg.ed1667718a321f0f3750748f289148b2.jpg

commiserations, I rarely take breakouts any longer but far prefer to wait for the first pullback after a breakout, they all to often fake out and just lead to yet another trendline redraw.

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23 minutes ago, dmedin said:

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14th May, it looked like gold had broken out of a continuation-style triangle and previous trend was up, I bought on the pullback to the dotted (original) line, but instead of going back up it sank back down.  The MAs looked good too.  Sadly it wasn't to be that time :D

 

gold.thumb.jpg.ed1667718a321f0f3750748f289148b2.jpg

@dmedin

OK So you said burnt but it wasn't a big loss?

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@FoxyNo it wasn't really a big loss.  I have a personal problem with overtrading / being too compulsive but this one on gold wasn't bad.

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2 hours ago, dmedin said:

@FoxyNo it wasn't really a big loss.  I have a personal problem with overtrading / being too compulsive but this one on gold wasn't bad.

@dmedin

I know what you mean but so long as you have the stop-loss discipline it's not too bad. It's really hard to break a bad habit, I find a few rules can help once you learn to stick to them. There are so many contradictions in trading it's hard to keep your head straight but if you break the rule and take the loss you know who to blame. If you wanna sell high or buy low remember to let the worm turn first it helps with the stop. I agree with you, I think Gold is still in the uptrend just had a big correction but sometimes it takes more than one try for a short term trend to reverse but keep an eye on those bulls.

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@gautamhait,

It is not for me to give you Gold trading tips. The only tip I can give you from a 'Trend Following' perspective is to follow the price action and trade with the trend and not against it. 

So what is the 'daily' looking like for Gold right now?

1094527524_SpotGold_20190601_13_25.png.1dbd5b96db68e5d2b5adc2627fffc056.png

Gold is trading above its 20, 50, 100 and 200 DMA so this is bullish. It is currently above the psychological $1300 level as well which again is a bullish indicator. I am not too happy about the slopes for the moving averages curves so the long term trend and MA curve for the 200 DMA is positive. 

The question I would ask if whether there are any other assets which are trending stronger than Gold right now? If so then they should be considered for trading. If not then you must decide whether you want to initiate a long trade and at around which price point you would like to enter. From looking at the 'daily' Gold seems to have support between the $1270 and $1285 range at the moment. Any drop to this level could provide a nice entry point to any potential long Gold trade. 

For me I think my capital can be allocated elsewhere and achieve more profit maximising potential. However, if things change then I have no issues coming back into Gold and Silver. Silver for me is not looking great at all from the 'daily' chart perspective. Gold is looking slightly better but for me it is not a trade I am looking to enter right now. 

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Gold has experienced a very sharp breakout. It is trading at $1325 at the time of this post and had hit earlier on $1328.  I think Gold will face strong resistance at the $1350's but that is just my personal assessment and I could be wrong. 

One cannot doubt that Gold is trending strongly right now so my view has altered from my previous post on Saturday based on the current price action, strength of the breakout, momentum and the volume supporting this upward move. 

If you look at the Parabolic SAR for Gold (below) then it is a very bullish indicator. 

2133994877_SpotGold_20190603_20_48.png.083f2cae0ed3d7d2ea7d0bb4bb99c7fa.png

Now the current Gold price is trading above its 'Pivot Points' as the chart I attach below demonstrates. 

2048187742_SpotGold_20190603_20_51.png.6f5519f28fc3873f3930925f74637bb5.png

Now if the price of Gold is going up and is above the calculated 'Pivot Point' (this indicator is available on IG) from the day before then one could infer this as a bullish sign. This indicator can assist to help us understand the strength and weakness of the Gold market in general. For those who are not familiar, the pivot point is the point in which the market sentiment changes from bearish to bullish and vice versa.

From a fundamental analysis perspective, it seems that the odds seem to be increasing that the UK could leave the EU in a 'No Deal' scenario. The US-China trade talks do not seem any closer to a satisfactory conclusion. These two combined are providing the 'Geopolitical' backdrop and acting as a driver for Gold prices to appreciate right now. 

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When you look at both the Gold and Silver 'daily' charts then both from a long term perspective are not really showing strong trending performance. Yes, short term both Gold and Silver have shown us bouts of strong price action. There is not doubt about that but if you look at the longer term picture then Gold and Silver is not as impressive as one may think.

550764303_SpotGold_20190616_10_33.png.d8d30404d8a76ae046a9636a631363fa.png

I have put a 'red line' where I think Gold may struggle to stay above unless there are some serious geopolitical drivers and 'Risk On' comes off the table. The price action for Bonds and Gilts will be a good barometer of this as the Gold prices should in theory support the Bond prices. 

Now look at the Silver 'daily' chart below. It is even less impressive than Gold from a longer term perspective. 1139126487_SpotSilver_20190616_10_35.png.2bd8991fa78a75418696f7cd4551bac1.png

I have used a 'Red Line' to highlight the price trajectory during the last couple of years.

Now this could be reversed going forwards where both Gold and Silver spike to such levels that they change the direction of the 'Red Lines' I have used on both the Gold and Silver charts. At this moment the trend over a longer term period seems down looking at the chart above.

The question one must ask is if the world is in such bad shape and there are problems all around the world both politically and economically then why has the price of Gold and Silver not shot up and created strong upward longer term trends?

I do not invest in Gold and Silver from a long term investment perspective as I simply believe there are better investments that can give me a far greater return than Gold and Silver over the same time period. I will occasionally trade Gold and Silver based on price action and strength of trend but that is it. The margin requirements for Gold and Silver are lower than other Commodities so there are times when it is trending strongly then from a risk/reward basis it makes sense. If you go through all the Commodities that IG offer on its platform then Gold and Silver are not the strongest trending assets within the Commodity Asset class over the past few years. 

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I wanted to just share the 'Monthly' Silver chart. I shall let you all draw your own conclusions and make your own predictions / assumptions. 

248384088_SpotSilver_20190616_13_22.png.8743091cff3cc35a8a05097ee7a31c50.png

Now have a look at the 'Weekly' chart below:

1612499051_SpotSilver_20190616_13_23.png.ebc69e2cc5c98958652b2c5f970cae2e.png

For me one could argue that all the downside is played into Silver and any sight of significant bad new could lead to immense upside. It would be a 'Contrarian' type investment / trade but it would also be a 'buy and hope' investment and style. There is nothing wrong with that as long as one accepts that is what it may be.

Right now time for some serious 'Flooding'. Apologies if you do not get a chance to this this post or my previous post on this thread due to severe 'Flooding'. The weather is bad in the UK. 😂

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I do not invest in Gold or Silver but I do occasional trade Gold and Silver. The margin requirements are attractive when trending strongly in any direction. However, it is important that one does not get a strong 'bias' towards Gold and Silver as they deceive far too much. 

Based on media hype and frenzy anyone would think Gold and Silver are shooting up and are going make new all time highs shortly. There needs to be demand and a serious appetite for capital to shift to such assets and based on the current price action I am just not so sure there is. At the moment I favour Bonds ahead of Gold and Silver. Now that could change as the price action changes but for now Bonds such as the German Bund have a far better price behaviour than Gold and Silver based on the same time period of say a couple of years. 

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Gold gona melt like water in a day or two to hit 1300 magic figure

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@mykig,

What makes you think that? 

I would be absolutely astonished if Gold dropped that much in one to two days. It is Wednesday 19th June 2019 - 7:00 am UK time. Let's see what the Gold price is in two days time.

If you want to articulate why you think this is going to happen then it would nice to hear your thoughts and viewpoints behind such a sharp drop / correction in Gold. 

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I mean not to 1300 in literally two days but in couple 5 to 10 days but it will go down to atleast 1330 in two days and the reason is investors moving towards tech but again it all come down to interest rate and stuff as I am not very successful with technical I react to news and a bit of fundamentals which striker for me.

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@mykig,

Let us follow the price action of Gold and test your assumption. I don’t know what Gold will do in five days time or where it will be it is currently on an upward trend and it seems to be moving in tandem with Bond prices so I don’t see a major drop but it can happen as equities seem to be on the rise again when you look at the major indices. There may even be some sideways activity whilst the markets decide whether it is Risk On or Risk Off.

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👍🏾Yes let us see and it will certainly be interesting as from a trading perspective It could start to get rather tricky with all the potential uncertainty floating around. This may benefit the price of Gold and Bonds but if the Fed lowers interest rates then you could be right.

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Posted (edited)

I am kicking myself for not trading the breakout of gold now :P

My thinking now is that I'd like to see 1346 established as support and go long from there.  It's pretty obvious (now, with benefit of hindsight) that the May selloff on the indices was a relatively shallow retracement of an uptrend, so gold will probably be stuck in the doldrums again for some time.

Edited by dmedin

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@dmedin,

Gold is at $1243 and looking like the upward trend is weakening. There could be some sideways price movement until the market knows whether interest rates are going to go down or not. If they go down then it will boost equities and riskier assets meaning Gold and Bonds would see a decline. Now this is only one scenario. If interest rates were raised then it could have the opposite effect. If uncertainty lingers then we could see range bound activity.

The problem is none of us know what is going to happen so the only way to play it is to trade with the current trend direction or sit and monitor patiently. I think $1350 is a key psychological price point. If Gold can stay above that price point then it may lead to a sharp rise upwards. At this moment in time it is unable to do so. Silver is struggling to go above $15.00 and against is facing similar struggles. 

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you are right wait and look for whats happening with interest rates but trading is all around probability.In worse case either I will owe you 13 points or otherwise you owe me 13 points lol😀

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@mykig

I agree that successful and profitable trading is about increase the odds and probability in your favour when making a trading decision. This is why I would not advise trading against the trend and to trade in the direction of the trend based on the timeframe you are using. 

People mistake odds and probability with gambling and though both are used in gambling what makes trading different is that you have both fundamental factors and technical factors. You have access to large amounts of data and you can conduct analysis and then make an informed decision.

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When one looks at the 'Monthly'. 'Weekly' and 'Daily' then Gold is at a critical long term juncture in terms of price. It faces pretty strong resistance at the current price area. If it were to break out of this then it could be bullish for Gold. 

Silver is looking like it is trying to aggressively breakout. Now this could all be a short term reaction to the Fed announcement of not raising interest rates but no doubt this same scenario will rear its ugly head next month and the month after. 

I do not think Gold will crash whilst UK has not exited the EU or the US has not confirmed the US-China Trade position. These to uncertainty alone are enough to keep the Gold and Silver prices at around current levels.

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Both gold and silver are taking off right now.

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@dmedin,

Yes that is right. Gold hit $1395.06 and Silver hit $1532.90.

Both are showing aggressive and bullish upward price action. The margin requirements are attractive and it is times like this when for me personally it is worth trading Gold and Silver as there is a chance of making reasonable profits using leverage. When Gold and Silver are not moving like they are now then there tends to always be better trading opportunities and stronger trending assets elsewhere. 

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Posted (edited)

Silver has a lot of catching up to do so seems like a more aggressive play but with considering the risk/reward seems a very attractive trade on the 'Long' side. Gold of course is leading the way. When you look at the 'daily' it has broken out of a price range and there is a clear breakout. 

For those who are not trading Gold then I would advise to go 'Long' on any pullback as the next major move in Gold could be pretty significant based on this current price behaviour.

I think the mere fact that the Fed did not raise US interest rates has boosted Gold and Silver and given a purpose / driver for this current move. I would suggest keeping a close eye on the US Dollar and Bonds to give a better insight into the future direction. Also political and economic issues surrounding the US, UK, China and India etc. will also give a trading perspective.

Remember Diwali is coming so India should begin to increase its Gold imports. The middle class in India is becoming more and more affluent. So we may see 2-3 month period where the Gold price could potentially have a chance to appreciate.

The danger with Gold and Silver is that the demand and appetite is not there compared other more riskier assets and therefore the actual big move does not materialise. That risk is very possible so stop loss management will be key in case the breakout does not lead to a significant move upwards in both Gold and Silver. 

Edited by TrendFollower
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Thanks a lot for putting seed in my mind otherwise I was gonna get destroyed hence i waited and didn't go for impulsive short  I longed after watching all the drama hence saved but again thanks a lot otherwise I was gonna get crushed 

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@mykig,

If you start at the beginning of this thread then you will see 'live' trades I shared with the IG Community for both Gold and Silver on the 'Long' side. It may help you see some of the good things I did and also some of the bad things I did. I think you may find it useful to see my journey I shared with the IG Community. 

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Gold's price action is phenomonal right now. Silver must at some point experience exceptional price action as it has a lot of catching up to do. If things continue as they are then Silver has more upside potential than Gold based on a chartist perspective. 

There is no guarantee that the US Fed is going to lower interest rates. So this current price behaviour is based on an assumption that it could in the future which makes it a very speculative trade. Lower interest rates will affect the US Dollar and Yields. As a result it could make Gold's Yield look quite attractive. However this is based on potential right now. 

Now I personally have no problem with a speculative or assumption based trade as I try and trade the price action and right now Gold's price action is enabling its price to shoot upwards literally like a 🚀 rocket when looking at the 'daily' chart. So do I care what the Fed does or does not do in the future? Not really as trading based on price action means literally that and putting aside the drama of the US Fed and what it may or may not do in the future. 

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Gold rarely behaves like this. What do the markets think is going to happen that is bad? UK leaving the EU without a deal on October 31st? Trump and China not agreeing a trade deal? Surely if China and US were going to agree a deal, this would have been done. It is dragging on because neither side wants to back down and both are holding their ground. This causes market unrest and uncertainty. 

It has hit $1412 and Silver has hit $15.57. I think Silver will need to hit at least $16.00 to keep in pace with Gold if not a lot higher. So an aggressive upward move should come for Silver. 

If Gold hit $1500 then it is going at attract a lot more capital to the asset class. This is because the trend and and momentum would be so strong that institutions would not be able to ignore it. 

It seems Gold is forming a longer term trend. I think those who are not in Gold yet should wait for the correction phases to enter. Those who are already in should use these same phases to add to their positions. Buy on any drops as the price is climbing upwards and 'pyramid' upwards. 

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I think any rhetoric from Trump and the US may dictate the way Gold is going shine or not in the coming week.

I think the article below and others will play an important factor in relation to the price action of the shiny metal.

Iran warns of risk of conflict, Trump sees scope for deal

https://uk.reuters.com/article/uk-mideast-iran-usa/iran-warns-of-risk-of-conflict-trump-sees-scope-for-deal-idUKKCN1TO0DW

 

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Gold is demonstrating a major breakout as shown by the 'daily' below:

1039308148_SpotGold_20190624_18_34.png.04ff6024bf085d6a15ff55084cf6545d.png

If this is a significant move upwards and if there is any substance behind this move then 'buying the dips' may prove fruitful. 

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