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Potential 'Long' Gold Trade

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The Gold chart is looking like it could turn bearish with some downward price action.

A fall below $1419 would take it below its 20 DMA on the 'daily' so aggressive traders may use that to initiate Gold short positions. 

1745764914_SpotGold_20190731_17_32.thumb.png.366cbc57e003215d66e598c7484e77a2.png

If Gold can stay above its 20 DMA then that would be a bullish indicator for me that could avoid any downward price action. 

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Well there it is a US interest rate cut as expected. It comes as no surprise and Gold touched $1410 though is at that critical 20 DMA level on the 'daily' of $1419. I do expect a further decline but let's see what the price action is in the next 24 hours as the dust settles and the markets look forward to the future expectations. 

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Gold hit $1404 and is currently trading around $1406 so it will interesting to see if Gold can hold and stay above $1400 price level. 

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Silver seems to be leading the way in its bearishness. As they say the bigger the rise, the larger the fall. 

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Well Gold has done the opposite of what I expected and shot back up to $1446!

This demonstrates that economic theory may tell us one thing or what should in theory happen but the market is always delivers surprises or the unexpected. This is why price action is king and why in my personal opinion  it 'trumps' economic theory, historical traditions and patterns. 

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Gold is looking compelling from an investment horizon right now. It looks rather attractive from a longer term trading perspective too. 

Let us start with the 'Monthly'. To me it seems like there is a potential breakout on the horizon which gives a bullish tone to the narrative. The price action will provide confirmation in the months and years to come. The 'Weekly' seems to be showing a stronger narrative of the potential breakout. It is the 'Daily' which is where it begins to get rather interesting and this is coming from someone who does not like Gold as an investment! Here the price action has confirmed the breakout for me.

This narrative continues until the 1 Hour chart where short term problems arise in the upward trending bullish narrative. This is normal and perfectly healthy. 

I would have loved to have shown the respective charts to make my point but for some reason it was not allowing me to do so. Therefore please accept my apologies but I am sure you can switch the timeframes and see for yourself. 

 

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@TrendFollower

I agree, it is still in a strong uptrend - no evidence to the contrary.  Some oscillators show it as being overbought, but that doesn't necessarily mean price is going to fall.  It could just mean it's going another leg higher. 

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@dmedin,

Once you have taken a directional trade with (not against) the trend then hold and do nothing. You can by all means add on the corrections/dips as the price rises. You can also use leverage to maximise your profits in the trade. It requires nothing more. If the trend reverses and you are wrong then ensure you have a stop loss which is not too tight (as you will get stopped out) and take a smallish loss which you are comfortable with. 

The key to succeeding in this strategy is to identity as early as possible (breakout stage) the strongest trending assets to trade. Get this right and you have a better chance of more winning and profitable trades. This of course is my personal opinion based on many years of experience.

Complexity does not count for anything in trading. In fact the market is ruthless and it hates those who think they are clever and know it all. It will take their money (that is if they trade!). The market owes nothing to no one. If a trader wants money then it is going to have an edge to beat the market otherwise yes they may be lucky now and again but over time the market will take from them their capital. 

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@dmedin,

I agree, Gold is in an uptrend longer term. Now as I am a medium to longer term trend follower (some would describe me as a positional trader) then for me the shorter term ups and downs and price fluctuations are irrelevant. This is where timeframes come in. 

I have absolutely no reason to 'Short' Gold. The traders that would short Gold are either day traders, swing traders or shorter term traders. I am none of these. Those traders who are will of course discuss and analyse the shorting potential of Gold with a shorter timeframe involved. 

Price go up and down. This has happened since the start of the markets. It is the way of the markets.

This is a joke but I predict that Gold price will go up and on the way up it will also go down too! I am 100% confident that the Gold price will continue to go up shorter term but along the way the price will go down whilst doing so. I do not need even need to look at a chart to predict this or even draw a single line or arrow on a chart to forecast this.

Now comes the question of timing.  I do not think technical analysis, EWT or any other magical source can predict with accuracy the timing as if it could then those traders would win on the majority of their trades and would hardly ever be wrong. Because I do not have a crystal ball I decide to adopt trend following principles as it does not require precision timing. That is the beauty of trend following. You do not need to buy at the optimum or the lowest point. Timing is one of the most difficult things in trading. There are just so many variables and because I work full time for a living as I feel that trend following allows me the ability to work full time and trade. 

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Gold is trending clearly upwards. It has been since August of last year. If you look at Bonds then they started trending strongly upwards around the two years ago so there was a signal / indicator that Gold could appreciate in price. That is exactly what has happened. Of course timing is the thing that catches most traders out and this is why I monitoring the price action, waiting for the breakout and trend identification with confirmation signals and then entering on the long side makes sense to me.

If you look back at when I started this thread then you will appreciate that I have kept things simple and there has been absolutely no need for complexity.

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Gold is behaving like a safe haven right now and for me it is all about 'Risk On / Risk Off'.

If you look at Bonds and Gilts then you can see that capital is being positioned in safer and more defensive assets with the possibility of a recession in some big and influential economies looking more likely if reports are to be believed. 

Also if there is a sell off (I don't know that there will be one imminently) then that capital has to be allocated somewhere by the very large institutions (they move the price of an asset). It could find itself in Gold and Bonds. 

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investors should investigate the best gold stocks asx for their safe investment because this can be the reasons to be the single metric that can not measures the overall performance, the international market is witnesses on the rise for gold shares australia

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Posted (edited)

It's still in a strong uptrend but it's losing some of its oomph.  Now is a really good time to watch closely and look for a nice dip to get long.  1380 would be perfect.

2001300487_SpotGold_20190819_13.54(1).thumb.png.e2642f3f5c034d51ab8d39b31bf11b85.png

Edited by dmedin

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@dmedin

If Gold hits your price target and you open a long trade then just hold that trade and do nothing clever until the trend reverses. Set your stop loss appropriately based on your risk tolerance and how much you are willing to lose of your capital or profits if you initiate a trailing stop. I wait until I am in profit to initiate my trailing stop. If you have a strong conviction based on the price action and certain signals and indicators then add on any dips.

Keep is as simple as you can. The key is to make as much profit as you can. The longer you are in a rising trend then the greater your chance of a winning trade and greater profit potential. If you have the risk appetite for it then use leverage on your trade to increase the profits but use a robust risk management strategy before doing so.

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@dmedin,

This is the wrong thread for the big Gold retrace discussion. I think you may have me mixed up with someone else? 😂

 

 

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The Gold retrace is only important if you trade the shorter term movements. I personally don’t and trade the bigger picture and play the longer trend game. 

It is also important if you want to add to your positions on the dips or it changes into a trend reversal. This is important more for me. 

We will all see any retrace via the price action. None us know when exactly it will happen so there is little point in thinking about it unless you want to trade short on the retrace. 

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If you look at Gold on the 'daily' then you will see that it has been making a series of 'lower highs' since the start of September 2019. 

I have highlighted this in the chart below using 'red ovals'. 

872594145_SpotGold_20191023_08_38.png.9ba75ae27828d5fa707cbcb95889100f.png

In terms of adding to any long positions on the dips or starting a new trade 'long' then one could consider waiting for the previous 'lower high' to be taken out by the price action before executing any such trade. Obviously there are many other methods but right now we do not know if Gold is going to continue going downwards and make another new 'lower high'. 

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That candle doesn't bode well for gold :(

gold.thumb.jpg.1e01df70fbc90a2f17212c2dd62a35da.jpg

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@dmedin,

Gold's price is related to 'Risk On' and 'Risk Off' perceived say six months into the future. It is what the market thinks could happen or is likely to happen down the road. Now this can change based on economic data being released by the US and other large world economies. It can also change based on war escalations around the world or change based on sentiment change and major news stories which affect countries and their citizens. 

This creates the price action for Gold. The narrative and backdrop is important. Right now the market seems unsure as to what is going to happen in relation to US-China trade war and UK and EU Brexit. This is not allowing Gold to continue upwards or downwards in a stronger way. 

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Gold has just made another 'lower high'. However it seems to the downtrend is beginning to show signs of weakness which could lead to a consideration period.

1726639815_SpotGold_20191029_19_17.png.eea2329ff268cef41afcd6c553638b2e.png

It has not made a 'lower low' on this recent downtrend and weakness. 

With Brexit delayed further and no real major negative news on the US-China trade scenario, it seems Gold may well begin to consolidate shortly if another 'lower low' is not made.

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If Gold is going consolidate at these levels (and it is a big if) then anything less than $1500 may be a good entry point for new entrants or adding to your positions for Gold traders. 

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Some of you will find this very interesting.

It just shows you how important the US is when it comes to the Gold price. It holds the most Gold reserves in tonnes and Gold is prices in the World's Reserve Currency which is US Dollars. 

The other important thing to look at is which country is increasing its Gold reserves. Germany has actually declined but Russia has increased its Gold reserves significantly over the past 10 years. So too has China. Usbekistan and Kazakhstan have as well. 

The data below is simply fascinating. 

Central Bank Gold Reserves

Country Population 2018 Gold reserves 2009 (tonnes) Gold reserves 2019 (tonnes) Gold reserves % change Gold reserves per head (grams)
United States 327,167,434 8,133 8,133 0% 25.01
Germany 82,927,922 3,407 3,370 -1% 40.75
Italy 60,431,283 2,452 2,452 0% 40.50
France 66,987,244 2,435 2,436 0% 36.30
Russia 144,478,050 649 2,113 226% 14.62
China 1,392,730,000 1,054 1,853 76% 1.34
Switzerland 8,516,543 1,040 1,040 0% 123.06
Japan 126,529,100 765 765 0% 6.04
Netherlands 17,231,017 612 612 0% 35.75
India 1,352,617,328 558 600 8% 0.45
Portugal 10,281,762 383 383 0% 37.14
Uzbekistan 32,955,400 175 355 103% 10.95
Kazakhstan 18,276,499 70 350 397% 19.43
Saudi Arabia 33,699,947 323 323 0% 9.81
United Kingdom 66,488,991 310 310 0% 4.70
Lebanon 6,848,925 287 287 0% 47.16
Spain 46,723,749 282 282 0% 6.04
Austria 8,847,037 280 280 0% 31.83
Turkey 82,319,724 116 254 118% 3.14
Belgium 11,422,068 228 227 0% 19.98
Philippines 106,651,922 155 198 28% 1.89
Algeria 42,228,429 174 174 0% 4.20
Venezuela 28,870,195 361 161 -55% 5.04
Thailand 69,428,524 84 154 83% 2.23
Poland 37,978,548 103 129 25% 3.39
Singapore 5,638,676 127 127 0% 22.70
Sweden 10,183,175 126 126 0% 12.50
South Africa 57,779,622 125 125 0% 2.21
Mexico 126,190,788 9 120 1301% 0.93
Libya 6,678,567 144 117 -19% 18.30
Greece 10,727,668 112 113 1% 10.52
South Korea 51,635,256 14 104 624% 2.03
Romania 19,473,936 104 104 0% 5.30
Iraq 38,433,600 6 96 1541% 2.52
Kuwait 4,137,309 79 79 0% 19.09
Indonesia 267,663,435 73 79 8% 0.30
Egypt 98,423,595 76 78 4% 0.80
Australia 24,992,369 80 69 -14% 2.79
Brazil 209,469,333 34 67 100% 0.32
Denmark 5,797,446 67 67 0% 11.54
Pakistan 212,215,030 65 65 -1% 0.33
Argentina 44,494,502 55 55 0% 1.24
Finland 5,518,050 49 49 0% 8.92
Belarus 9,485,386 23 47 103% 4.94
Jordan 9,956,011 13 44 241% 4.49
Bolivia 11,353,142 28 43 50% 3.85
Bulgaria 7,024,216 40 40 1% 5.71
Malaysia 31,528,585 36 39 7% 1.23
Burundi 11,175,378 0 38 128492% 3.54
Peru 31,989,256 35 35 0% 1.08
Slovakia 5,447,011 32 32 0% 5.83
Hungary 9,768,785 3 32 924% 3.22
Qatar 2,781,677 12 31 152% 11.84
Syria 16,906,283 26 26 0% 1.41
Ukraine 44,622,516 27 24 -10% 0.54
Tajikistan 9,100,837 2 22 868% 2.50
Morocco 36,029,138 22 22 0% 0.62
Afghanistan 37,172,386 22 22 0% 0.61
Nigeria 195,874,740 21 21 0% 0.11
Serbia 6,982,084 13 20 56% 2.91
Sri Lanka 21,670,000 21 20 -5% 0.93
Mongolia 3,170,208 1 19 1906% 6.07
Bangladesh 161,356,039 4 14 298% 0.08
Cyprus 1,189,265 14 14 0% 11.79
Colombia 49,648,685 7 13 87% 0.26
Mauritius 1,265,303 4 12 218% 9.83
Cambodia 16,249,798 12 12 0% 0.78
Ecuador 17,084,357 26 12 -55% 0.71
Kyrgyzstan 6,315,800 3 11 333% 1.81
Czech Republic 10,625,695 13 9 -32% 0.83
Ghana 29,767,108 9 9 0% 0.30
Paraguay 6,956,071 1 8 1141% 1.20
United Arab Emirates 9,630,959 0 7 0% 0.80
Myanmar 53,708,395 7 7 0% 0.14
Guatemala 17,247,807 7 7 0% 0.41
North Macedonia 2,082,958 0 7 0% 0.00
Tunisia 11,565,204 7 7 0% 0.59
Latvia 1,926,542 8 7 -14% 3.41
Nepal 28,087,871 1 7 349% 0.22
Ireland 4,853,506 6 6 0% 1.25
Lithuania 2,789,533 6 6 0% 2.06
Bahrain 1,569,439 5 5 0% 3.13
Mozambique 29,495,962 2 4 87% 0.15
Slovenia 2,067,372 3 3 -1% 1.54
Aruba 105,845 3 3 0% 29.55
Bosnia and Herzegovina 3,323,929 1 3 127% 0.85
Luxembourg 607,728 2 2 0% 3.76
Hong Kong 7,451,000 2 2 0% 0.28
Iceland 353,574 2 2 0% 5.78
Papua New Guinea 8,606,316 2 2 0% 0.24
Trinidad and Tobago 1,389,858 2 2 1% 1.41
Haiti 11,123,176 0 2 4351% 0.16
Albania 2,866,376 2 2 -1% 0.54
Yemen 28,498,687 2 2 0% 0.06
Suriname 575,991 2 1 -20% 2.45
El Salvador 6,420,744 7 1 -81% 0.22
Laos 7,061,507 9 1 -90% 0.13
Honduras 9,587,522 1 1 3% 0.07
Dominican Republic 10,627,165 1 1 0% 0.05
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It seems Gold is breaking out of its downward trend as illustrated by my chart below:

1009876429_SpotGold_20191031_20_37.png.b89ddae400f0be4fcfa41f0757602ff4.png

Now this could still reverse but the signs look encouraging with the backdrop of the US Federal Reserve lowering interest rates. 

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If you look at the 'monthly' for Gold then it does look ripe for a rise towards $1800 to $2000. 

 

On the 'weekly' it seems the first hurdle is $1600 followed by the next major hurdle of $1800. 

1004371429_SpotGold_20191031_20.42-2.png.f86964d48ff70421f3a0abbbc259b5e1.png

 

 

Spot Gold_20191031_20.40.png

Edited by TrendFollower
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Gold is approaching what is a critical point in my view. I don't always believe that past patterns have to play out the same in the future but I accept on many occasions they have. Gold is approaching such a point.

I am going to show you a chart below where I have highlighted the previous time a very similar patter on the 'daily' manifested itself and then what happened afterwards was a big move upwards. Could the same happen again? 

854619953_SpotGold_20191105_05_22.png.38416a6e90b919d710e6fa3b240c5596.png

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