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Potential 'Long' Gold Trade

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The one interesting thing I have noticed in the latest bearish price action for Gold is that it seems to be dropping more or less similar to Silver. Silver so far seems to be dropping less aggressively than I envisaged. I must admit I would have expected Silver to be going down for more aggressively than Gold. Don't get me wrong. They have both gone down and dropped considerably. The point I am trying to articulate albeit badly is that I expected Silver to go down far more and far quicker than Silver and this has not occurred so far.

 

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Gold's price action is very negative. This is an ideal scenario for shorting it in a short term basis. I think Gold will have further to fall. I include a chart below for illustrate this point.

1612173731_SpotGold_20190418_07_29.thumb.png.a220f0a351bb8337cb27dcd33c8389ec.png

I do not envisage Gold going below $1200 but there is the risk of it falling below $1250. This could attract a new wave of buying pressure due to traders and investors thinking they are getting good value. 

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I accidentally posted something for this thread on another one of my threads (US 500 Potential Shorting Opportunity). Please accept my apologies.  

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Gold need a reason to move up otherwise it will merely play out a downward move followed by sideways price action. So right now all the potential drivers have been delayed. So what are they?

  • UK Brexit
  • US-China Trade talks (lasting forever)
  • Recessions in major economies like the US
  • War
  • Significant Political and Economic Uncertainty

I could go on but you get the gist of it. There is no strong driver for the Gold price right now. Until this changes then Gold is not going anywhere near $1400 levels. No one has a map of the future. None us can possibly know what is going to happen going forwards. The speculative capital that drove Gold prices up is the same speculative capital that can drive Gold prices down. 

 

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Silver seems to be faring better than Gold today. I am not sure whether Silver has found support at the $15.00 level but I guess we are about to find out over the coming days and weeks.

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Well my question from my previous post has been answered in quick fashion. Silver certainly has not found support at the $15.00 level. It did not take days or week but a mere 22 hours to establish this!

Unless Gold finds a reason to drive the price upwards then I fear it will continue declining for the short term. 

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Gold needs negative news. Gold needs bearish news.

Otherwise the price action is telling the narrative of what is likely to continue happening going forwards in the short term. 

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Both Gold and Silver are giving away most of the price increases they delivered over the recent weeks and months.

In my personal opinion this indicates two things. The first is that the reasons why Gold and Silver were going up have now changed or the timescales have changed. The second is that the speculative capital involved in both has made its money and is now taking profits and shifting to other assets which it is targeting.

 

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I am going to share the current Gold chart (daily) below:

1949972719_SpotGold_20190427_10_15.png.6b2264ae98d8d8e1847c2c5aa5602e8b.png

Now as you can see from the chart above, Gold, is making new 'Lower Highs' and new 'Lower Lows'. This is bearish price action. 

Even when one looks at trend lines then it does present the potential for Gold to go down towards $1260 levels.

For me any potential 'Long' Gold trade would need to see the price action surpass the recent 'Lower High'. 

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Gold hit $1283.

For me personally there are two important price points for Gold for any potential long trade to be considered from this position.

One is the crossing of the psychological $1300 price point and staying above it. The second is crossing the previous 'Lower High' which was around $1308.12. These two price points are crucial and until they occur I would not suggest anyone entering a potential 'Long' Gold trade.

Right now around the price of $1285 from the 'daily' would represent a crossing of its 20 DMA. Short term that is also an important price point. By crossing $1300 from the 'daily' it would mean Gold crossing its 50 DMA and 100 DMA which is why I think it is an important price point because of the significance. It may also indicate the potential of a trend reversal as well. 

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Gold and Silver both having blue days today.

They are still in a recent downtrend correction mode when you look at the 'daily' chart. There could potentially still be further downside and it is not conclusive at this stage on whether further price declines will not occur.   

This type of activity will support 'Swing Traders' or those wishing to profit form volatility and price swings. 

I personally do not think Gold will see a large sharp drop. It may be gradual but there will be no panic major sell off. That is just my personal opinion as there is far too much 'RISK' lurking in the background for this to even occur. I do think there is further upside to Gold and Silver if bearish news is released in relation to major world economies such as the US in particular. 

The US Dollar price will be crucial to Gold's fortunes. 

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It seems Gold could be heading towards the late $1260's and Silver potentially down to the $14.60's.

Both have been playing out a downtrend since around middle of February 2019.

 

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Yes both Gold and Silver have rallied recently but Silver's chart 'Daily' still looks very bearish to me. Gold's chart fares only slightly better.

The drivers that will push prices up on both are 'FEAR' and the online media along with TV and print media are the ones who drive this fear.

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I stated on Saturday that fear could push prices up for both Gold and Silver and Trump has delivered via US-China trade talks. 

Gold has hit $1301.48 today. Silver is still looking rather bearish to me but it does tend to play catch up with its bigger brother. 

Gold has gone above its 20, 50, 100 and 200 DMA and therefore there is now an opportunity for a potential 'Long' Gold trade for those who wish to partake. This does come with great risks though. If US-China trade talks were to reverse into positivity then US indices could begin climbing upwards and Gold could resume and continue its downward path again. 

I include the chart below to illustrate the above.

1287504327_SpotGold_20190513_18_55.png.3a7753dd07760c216487bab0d8070283.png

 

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Though the long term trend in Gold is still in tact, shorter term, I fear there could be further downside until the upward move resumes. 

I want to highlight this by showing a chart with a trend line / resistance below.

1802618195_SpotGold_20190514_18_11.png.f9207924aac1520c9758e5370c1cd183.png

I now want to show the chart showing the longer term trend still in tact.

413919785_SpotGold_20190514_18_13.png.585898ee92c0b4a4775ecda481d77c20.png

Trump agreeing to meet the Chinese President in June has just put the brakes on Gold really breaking out to the upside. I think Gold will remain range bound to bearish until June. 

I think Gold is a more trickier trade than one may imagine. I can see some suggesting going long but I am not so sure this is the right time. I think $1300 needs to stick and Gold needs to stay above it for any long trade to be initiated and I do not mean just a few hours but Gold needs to day above $1300 for a good few days if not longer.

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Well by looking at my post above it seems Gold was not able to stay above $1300 for long. It hit $1284 overnight. 

1261347015_SpotGold_20190517_05_26.png.9fa40efd9d15ffeb1f25866716d6330f.png

Gold is still trading above its Parabolic SAR so once this drop has concluded it could potentially provide a good entry point on a long trade. 

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I am also thinking this would be a good time to go long on gold, but a bit demoralized and lacking confidence at the moment.

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Let's re-evaluate after close of business today.  :D

 

gold.jpg

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@dmedin,

Gold seems to have support at around the $1270 area. The was a hint of a double bottom so I think from a technical perspective it is important that Gold remains above $1270. I personally think it will at least until June and the next round of the cat and mouse US-China trade talks which are due to take place.

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Silver is heading for a 'Triple Bottom' if it is not careful. There is a clear 'Support Zone' which is coming up should it continue its decline as I have highlighted in the chart below.

1072079431_SpotSilver_20190517_16_49.png.78dd1c13e275e574859db55502737450.png

Gold on the other hand is too trying to go for a 'Triple Bottom' and approach the 'Support Zone' which I have highlighted in the chart below.

23226044_SpotGold_20190517_16_50.png.2730600eeab09f0440f04b033d2421ec.png

Both charts are bearish at the moment and this bearish stance is support by the price action for both Gold and Silver. There may well be a long opportunity coming up in the future but right now at this moment in time I cannot see a reason to go long. 

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Now for Gold my view today (it could change on Monday) is that if Gold 'Triple Bottoms' then there is the potential for a 'Long' Gold trade. If Gold follows Silver on its downward path then this potential would be eliminated. 

So I will stick my neck out again, be brave and make some potential trading suggestions BEFORE THE EVENT. 

Potential 'Long' Trade Idea 1:

Any trading execution between $1270 - $1275 to go 'Long' seems like a good entry point if it does not break $1270 that is!

I never have an exit price or target in mind. Why restrict profits? Hold the position for as long as the trend is in your favour. Only exit once the trend reverses and keep the position as long as you need to. 

Now the above trading strategy is a simple trading strategy that does not involve anything too complex or complicated and does not involve lines and arrow on charts followed by more lines and arrows!

Potential 'Long' Trade Idea 2:

Go 'Long' once the 20 DMA is passed on the 'daily'. Set initial stop loss at 200 DMA. Once in profit set 'Trailing Stop' based on your risk strategy. Only exit on any confirmed trend reversal. 

Potential 'Long' Trade Idea 3:

Go 'Long' once the 20, 50 and 100 DMA's (they are quite close together) are crossed. This may increase the odds and probability in your favour but reduce your return as you may miss the price action prior to these being breached. Stop loss strategy the same as above.

Potential 'Short' Trade Idea 4:

Now for those of you who are not already 'Short' on Gold then you may wish to initiate a 'Short' trade once the 200 DMA is breached on the 'daily' chart on the downside. You may wish to consider setting a stop loss around the 100 DMA point but switching to a 'Trailing Stop' once in profit. This trade is unlikely but you never know!

I have deliberately kept the trading ideas and execution very simple and tried not to make it complex at all. For those slightly more experienced traders you would set your stop losses based on your risk management strategy. You would also have a capital allocation strategy. So for example some of you would not stake more than 1% of your capital on any one trade. Your stop loss would say a have a maximum tolerance rate of between 1% - 5%. This is just an example and many traders will have different criteria. 

Now the three potential 'Long' trading ideas and the potential 'Short' trading idea I have given are just potential ideas. I am not suggesting they are right or are the best trading ideas. I am just trying to encourage others on the IG Community to actually discuss real trades and share real trading ideas. The easiest thing to do is to submit a post after post, start a new thread after thread and post links and charts after links and charts.

The real value in the IG Community is for like minded traders to share trading ideas. What could be the best entry point. How would one identify that entry point. Why should one go 'Long' over 'Short', etc. I am not worried or scared if the four ideas above work or do not work. What is important is to start the process of improving the IG Community and offering value to any readers and posters alike. That value could lead to improved decision making in executing potential trades or even considering trades that one simply did not think of. Do not let asset class be a barrier. All asset classes will have potential trading opportunities both long and short. It does not matter if it is a commodity, cryptocurrencies, stock, indices, etc.  

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Not sure what the point of this is really, @TrendFollower  has already told us that "my serious trading (the part I keep to myself - secret) 😉 is Commodities and Cryptocurrencies" .

So presumably all of the above is just dart chucking.

The real problem though is that it's not even a triple bottom pattern, a triple bottom pattern (like a double bottom) needs a reasonably symmetrical neckline. It was a double bottom but that pattern was triggered and played out, price moved up and just missed target before falling back again, the move up to 1303 completely corrupted the neckline for any triple bottom pattern.

So what you are left with is a third attempt to break support on a bearish chart and been given 3 different rather simplistic strategies to go long. Forgetting the direction I would be inclined to gather some stats on any of the above before ever actually trading them let alone encourage others to do so.

I've read the above in red and see that it's in a similar vein as the red text in the 'potential short 500' thread.

I'm glad to have helped, again.

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@Caseynotes,

There are many things that you post that I do not know what the point of them are. A dart player who is skillful will be able to precisely throw a dart on the part of the board they want to. They will be able to more times than not target a specific number or bullseye.

How accurate is your 'Dart Chucking' @Caseynotes?

I agree it is not a typical or traditional 'Triple Bottom' but if the price bounces off around the $1270 then from the 'daily' chart perspective it does have strong similarities to a triple bottom. However, one must not get worked out about whether it is or not. What is important is how effective your trading decisions are and how much profit you can maximise from a potential trade. 

If you are more intelligence, wiser, have more experience and know better then please do share a LIVE TRADE with us all on the IG Community.

 

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4 hours ago, TrendFollower said:

Now for Gold my view today (it could change on Monday) is that if Gold 'Triple Bottoms' then there is the potential for a 'Long' Gold trade. If Gold follows Silver on its downward path then this potential would be eliminated. 

So I will stick my neck out again, be brave and make some potential trading suggestions BEFORE THE EVENT. 

Potential 'Long' Trade Idea 1:

Any trading execution between $1270 - $1275 to go 'Long' seems like a good entry point if it does not break $1270 that is!

I never have an exit price or target in mind. Why restrict profits? Hold the position for as long as the trend is in your favour. Only exit once the trend reverses and keep the position as long as you need to. 

Now the above trading strategy is a simple trading strategy that does not involve anything too complex or complicated and does not involve lines and arrow on charts followed by more lines and arrows!

Potential 'Long' Trade Idea 2:

Go 'Long' once the 20 DMA is passed on the 'daily'. Set initial stop loss at 200 DMA. Once in profit set 'Trailing Stop' based on your risk strategy. Only exit on any confirmed trend reversal. 

Potential 'Long' Trade Idea 3:

Go 'Long' once the 20, 50 and 100 DMA's (they are quite close together) are crossed. This may increase the odds and probability in your favour but reduce your return as you may miss the price action prior to these being breached. Stop loss strategy the same as above.

Potential 'Short' Trade Idea 4:

Now for those of you who are not already 'Short' on Gold then you may wish to initiate a 'Short' trade once the 200 DMA is breached on the 'daily' chart on the downside. You may wish to consider setting a stop loss around the 100 DMA point but switching to a 'Trailing Stop' once in profit. This trade is unlikely but you never know!

I have deliberately kept the trading ideas and execution very simple and tried not to make it complex at all. For those slightly more experienced traders you would set your stop losses based on your risk management strategy. You would also have a capital allocation strategy. So for example some of you would not stake more than 1% of your capital on any one trade. Your stop loss would say a have a maximum tolerance rate of between 1% - 5%. This is just an example and many traders will have different criteria. 

Now the three potential 'Long' trading ideas and the potential 'Short' trading idea I have given are just potential ideas. I am not suggesting they are right or are the best trading ideas. I am just trying to encourage others on the IG Community to actually discuss real trades and share real trading ideas. The easiest thing to do is to submit a post after post, start a new thread after thread and post links and charts after links and charts.

The real value in the IG Community is for like minded traders to share trading ideas. What could be the best entry point. How would one identify that entry point. Why should one go 'Long' over 'Short', etc. I am not worried or scared if the four ideas above work or do not work. What is important is to start the process of improving the IG Community and offering value to any readers and posters alike. That value could lead to improved decision making in executing potential trades or even considering trades that one simply did not think of. Do not let asset class be a barrier. All asset classes will have potential trading opportunities both long and short. It does not matter if it is a commodity, cryptocurrencies, stock, indices, etc.  

@TrendFollower

I understand why people went long following the double bottom on gold, but that is not following the trend. There is a clear downtrend in gold so I would have expected a trend follower would have gone short as shown in this chart or would be looking for a short entry on any retracexauusd-d1-ig-group-limited.png

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@Foxy,

Thank you. Spot on. I totally agree that the trend is 'short' and the current trade is 'short', full stop. That is not up for debate in my opinion. However, I appreciate that lots of other traders on IG Community follow many different trading styles and philosophies and not just trend following. Just because I do does not make it right for everyone else. 

This thread is relating to potential long gold trades. So to open up a discussion I have merely 'dart chucked' a few trading suggestions. 😂🎯 Whether the darts have hit their intended spots or have gone off the board we shall find out very soon. 

The problem is that there are hardly if any trend followers who make themselves known on the IG Community so my audience for this thread are not really trend followers. Your expectation for trend followers is right. They would already be short and would only exit on any trend reversal. 

However, let me ask you a question. If the price of Gold went down to around $1270 levels and held and did not breach below then do you think that level would provide strong support for Gold and enough for a potential trend reversal?

I personally do not like setting exit targets. I notice you set $1249.00 as a target but if your short trade got to this level then what? Does your stop loss execute and you are out? If this is the case, what if the price continues going down? If in profit, I tend to switch to a trailing stop. If the Gold price goes anywhere near $1249 then for me that is a very bearish downward move for Gold in my opinion. I would be expecting stocks and crypto to be storming upwards in this same time period with RISK ON trading decisions being made. 

Thank you very much for your contribution. It is very much appreciated and for the record I agree with your post. 

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20 minutes ago, TrendFollower said:

@Foxy,

Thank you. Spot on. I totally agree that the trend is 'short' and the current trade is 'short', full stop. That is not up for debate in my opinion. However, I appreciate that lots of other traders on IG Community follow many different trading styles and philosophies and not just trend following. Just because I do does not make it right for everyone else. 

This thread is relating to potential long gold trades. So to open up a discussion I have merely 'dart chucked' a few trading suggestions. 😂🎯 Whether the darts have hit their intended spots or have gone off the board we shall find out very soon. 

The problem is that there are hardly if any trend followers who make themselves known on the IG Community so my audience for this thread are not really trend followers. Your expectation for trend followers is right. They would already be short and would only exit on any trend reversal. 

However, let me ask you a question. If the price of Gold went down to around $1270 levels and held and did not breach below then do you think that level would provide strong support for Gold and enough for a potential trend reversal?

I personally do not like setting exit targets. I notice you set $1249.00 as a target but if your short trade got to this level then what? Does your stop loss execute and you are out? If this is the case, what if the price continues going down? If in profit, I tend to switch to a trailing stop. If the Gold price goes anywhere near $1249 then for me that is a very bearish downward move for Gold in my opinion. I would be expecting stocks and crypto to be storming upwards in this same time period with RISK ON trading decisions being made. 

Thank you very much for your contribution. It is very much appreciated and for the record I agree with your post. 

The exit point set represents the bottom of the channel and a clear support level, this is how to maximise profit. There are only three potential exit points for a trend follower. 1. the stop is hit. 2. the trend is broken. 3. the channel is hit. If you wait for the trend to break you will lose around half your profit, Sell High Buy Low in a downtrend. It is also a myth that you only trade with the channel, in a clear zigzag trend you could buy the lower channel because in both trades the entry point offers very low risk. The $1249 level is not an opinion just a projected point on the channel. I have no idea how high or low Gold or Crypto or any other instrument will go, I just follow the charts.

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@Foxy,

Ok that is interesting.

I accept your premise on if you wait for the trend to break you will lose profit but my strategy is to capture the middle part of the trend. I will never buy at the bottom and never sell at the top on any long trade. Sometimes trying to exit before a trend has reversed can lead to missing out on the big moves which come later. I take your point but that is a strategy for other trading styles rather than mine.

Sometimes the 'zig zag' can occur and then boom a sharp moves is followed and exiting too early is one of the biggest mistakes traders make.

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