Next Move In Gold Should Be A Breakout To The Upside

Jun. 01, 2015 4:35 PM ET
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing trading of stocks overnight. I also specialize in weekly stock option premium selling, along with pre-market and post-market psuedo market maker and stealth trading activity, and selling commodity option strangles (selling delta neutral pairs of far out-ot-the-money puts and calls), with the intent to achieve a steady 1% weekly return. After 32 years, well battle tested, very opportunitistic while putting capital preservation as tantamount. Rehabilitation Counselor over 20 years, M.S., M.B.A., now an around-the-clock speculator. Incorporate seasonals, time of day, and other patterns and methods where high probability price movement patterns can be statistically forecast. Know how to safely go long high beta, heavily shorted stocks; know how and when to use extremes in sentiment to take the other side. I like to fade extreme moves as my proprietary methods are based on reversion to the mean theory. Developed my own scale trading and money management techniques. Will change and adapt my trading style based on current market conditions. I hope to start a chatroom devoted to teaching speculators how to see and capture daytrading opportunities. They say that those who can...do, while those who can't....teach. I want to provide teaching from someone who really can do, someone who knows how to make steady returns while experiencing minimal drawdowns. As a mentor, I would love to share my knowledge and support to help small traders. I came from humble beginnings and have never forgotten it. I want to accelerate the learning curve of my chatroom students so they won't have to make all the mistakes that I have over the years. I am excellent at devising and implementing strategies that can quickly turn a losing trade into a net winner.

The above Daily chart of August gold shows a close of $1189.30 but that was just where it was trading when I ran the chart. Today at 1:30 p.m. EST the close turned out to be about $1188.70, down $1.10 and gold continues to trade between $1188 and $1191 late this Monday afternoon, June 1, 2015. Being an outside day (higher high and lower low than yesterday), I was hopeful that August Gold would close up to make a bullish confirmation. However, closing up or down a dollar or two is basically unchanged and overall today was a wash with neither the bulls or bears winning.

In fact, if you look at the above chart, you should notice that for the fifth straight day, August Gold has closed within a tight range of only $3.30. Having fallen from resistance at $1232, gold has found support and even though it is not rallying, neither is it selling off. When tight closes occur after a selloff, it is bullish. The last time we got a similar pattern in gold was March 11th to March 18th, when August gold closed for six trading days, within a tight spread of only $5, ranging from $1154.80 to $1149.80. Look at the long bar that occurred on March 18th on the above chart. Gold rallied up over $25, only to fall back and barely close up. (Note that today we had a surge to $1204.70 which was $14.80 higher only to fall back and close down $1). Back on March 18th, that first day up looked like a failure, very similar to today's action. Then gold continued to move higher and closed up 7 straight days, gaining $66. I don't know if we will now get a similar $66 rally in gold, but we could very well move higher from here. I do expect that the next breakout will be to the upside and not the downside. If we do get that breakout back above $1200, then you should monitor gold closely for a few days. Another failed rally that fails to take out the resistance from $1205 to $1215 would not be constructive and could lead to a further selloff. But what tells me that the next rally should be "for real" is the fact that the $1180 support level has held now for the fifth or sixth time over the last couple months. Gold has a very established base and even if we break the base we should still turn higher, just from a lower level.

I am aware that the bears keep selling the rallies into resistance but if gold keeps knocking on the topside door, resistance should finally give way and a significant short-covering rally like we saw in January, could be repeated.

Disclaimer:

The thoughts and opinions in this article, along with all STOCKTALK posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

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