Jump to content

Short in Gold!

Recommended Posts

Recently the gold is on levels where it looks like the short side is the one to play. Even though it is a long instrument based on historical data the buying pressure in the last several weeks was so strong that the correction is something that everyone was expecting.

In the current situations on the daily chart, we can observe the double top and increasing selling pressure. But all the data today like non-farm payrolls and unemployment rate are bringing a lot of tension on the markets which can interfere heavily with your short position.

So what is your opinion should you play safe haven instruments on short or is it better to avoid such a position because they are carrying way more risk.

  • Like 1

Share this post


Link to post

I would stay on sidelines until after US NFP - USD/Gold/Indices will have initial impact on number.

  • Like 1

Share this post


Link to post

@Valentin,

Unless you have some sort of strategy to determine how far Gold will correct then I would be weary of going 'Short' on Gold right now. The overall trend in Gold since August 2018 is upwards. There has been no major trend reversal on this long term trend which is approaching 12 months next month. 

If you are going to go 'Short' Gold then you have to have distinct strategy in play and one which you can execute with confidence as otherwise the following words will apply - 'Betting', 'Gambling', 'Luck' and 'Hope'.

  • Like 3

Share this post


Link to post

@Valentin, You assessment is perfectly valid, there are many indicators pointing to precious metals going Bearish, at least for a while, and you point out a few in your post.  I have outlined a more comprehensive position on this in my related threads so I will not reprise here.  As to your specific questions:

  • There is no problem shorting Gold/Silver or other so-called safe havens.  They are markets like any other and as such experience wave moves up and down.
  • The issue I see is that the big move to seek on these markets is the eventual big Bull breakout, when it comes.  I do not see it as already here, as some others do, I think we need to see another break up through 1440 on Gold to take this bet.  On the Short side there are several scenarios so it is not a clean play, therefore fraught with risk and uncertainty - a likely counter trend move.  That said there could be some decent points on offer but perhaps there are better, less risky, trades on offer just now?
  • Like 1

Share this post


Link to post
1 hour ago, TrendFollower said:

@Valentin,

Unless you have some sort of strategy to determine how far Gold will correct then I would be weary of going 'Short' on Gold right now. The overall trend in Gold since August 2018 is upwards. There has been no major trend reversal on this long term trend which is approaching 12 months next month. 

If you are going to go 'Short' Gold then you have to have distinct strategy in play and one which you can execute with confidence as otherwise the following words will apply - 'Betting', 'Gambling', 'Luck' and 'Hope'.

@TrendFollower

Take a second look at your chart, we have strong resistance from the weekly chart with a double top on the H1 and the inter-day trend is weak. I think a re run of last week could be on the cards unless there is a rally later on today.

xauusd-h1-ig-group-limited-2.png

 

  • Like 3

Share this post


Link to post

I agree that the overall trend is long but there are several indicators that are suggesting that we can extract benefit from eventual upcoming short opportunities. I think we can all agree that patience till the data posting in 15 min is important but after that, I think the risk is worth it so I will probably pull the trigger and open a short position if the price action reacts accordingly.

Share this post


Link to post
5 minutes ago, FFS_Daytrader said:

Gold touched 1395 (23.60% Fib) and bouncing back up after NFP

That looks like a reaction wave (a 2 or a B or such) and the next wave is back up 😎

  • Like 1

Share this post


Link to post
Just now, dmedin said:

That looks like a reaction wave (a 2 or a B or such) and the next wave is back up 😎

Yep - Payroll more than expected so now "some" indecision on July rate cut but i think July rate cut is a foregone conclusion so will see some pull back in any gold spike near FOMC meeting.

Watch indices/USD on US open - this may push gold up today.

  • Like 2

Share this post


Link to post

I am not sure what could be the further development of this down wave now. But if the price closes below 1400.00 it is possible for the down trend to have continuation next week as well.

Share this post


Link to post
28 minutes ago, FFS_Daytrader said:

Gold touched 1395 (23.60% Fib) and bouncing back up after NFP

Touched 1395 (23.60% Fib) 3 times now!

  • Like 1

Share this post


Link to post

On the 1H and 4H charts the picture looks like a clear break of near term support.  Gold and Silver look set to test the next levels (circa 1380 & 1505 respectively).  Silver is closer.   A break below these levels is a lower low, after lower highs...

XAUUSD-1-hour_050719A.thumb.png.b551ab526274a344ae0d62db0ef713c6.pngXAGUSD-4-hours_050719A.thumb.png.3650b213fdcb483592d5b0cd12ee72f4.png

  • Like 2

Share this post


Link to post

I am not suggesting that Gold will not go down. The point I am making is that one has to have some form of clear strategy when shorting Gold rather than they think it will go down or must go down. 

All assets go up and down and shorting is an important tool to be able to make money when the asset is trending downwards. I am all for shorting. A strategy is required when shorting as trying to short without one is insane in my opinion.

  • Like 1

Share this post


Link to post

Strategy or no strategy price action is king, I'm sure someone on the forum keeps banging on about that ad nauseam...

Silver has broken through support and is heading on down, Gold is coming up on that 1380 level, let's see what happens next.

XAGUSD-Daily_050719B.thumb.png.79c5e6e09370f0e6868ed2e616a61ccf.pngXAGUSD-4-hours_050719B.thumb.png.ca441d755de1b9057f433c2322cd00af.png

  • Like 1

Share this post


Link to post

I agree price action is king but trading without some form of strategy is not sensible especially when shorting in my opinion. How do you know when to set your stop loss without some form of strategy? What is your exit plan if the price moves in your direction? When do you exit and take your profits?

If you look at Gold then it would have been a good short today but hindsight is a wonderful thing or commenting after the event is also great but anticipation is key. @Valentin got this part right. 

Now @Valentin was thinking on the right lines when you look at his initial post and the subsequent price action. But if you are trading without any rules or discipline in sticking to your rules then eventually you will come unstuck. That is just my opinion and each to their own.

  • Like 1

Share this post


Link to post
23 hours ago, Valentin said:

Recently the gold is on levels where it looks like the short side is the one to play. Even though it is a long instrument based on historical data the buying pressure in the last several weeks was so strong that the correction is something that everyone was expecting.

In the current situations on the daily chart, we can observe the double top and increasing selling pressure. But all the data today like non-farm payrolls and unemployment rate are bringing a lot of tension on the markets which can interfere heavily with your short position.

So what is your opinion should you play safe haven instruments on short or is it better to avoid such a position because they are carrying way more risk.

 

@Valentin

Gold Is Heading For $1250

Well that is my opinion, and here is why:

Gold has had a great run so far this year but there is good reason to suspect we may have topped out. Here I will show you that this bull run didn't start in August 2018 but in fact started in November 2015. Since then it has been in an ascending channel or bullish channel of which we are now at the top edge. Looking back at previous times when we reach the upper edge of this channel we saw several weeks of consolidation before a retreat to the lower edge of the channel. A break out above 1450 can't be ruled out and would negate this analysis but otherwise the best play in my book would be to sell highs until this is proved wrong.

xauusd-w1-ig-group-limited-2.png

  • Like 1

Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


×
×