rounded corner
rounded corner
top border

TECHINCAL GOLD!!


Bookmark and Share

Following its low close on Dec 17th at 1050.30,  April gold futures have continued to rally and just yesterday traded to 1123.60or right up to resistance found between the 1122.00/1137.80 price level discussed in our January 13 update. Where gold now finds itself – once again – is trading at major resistance highlighted on the monthly chart below:

Monthly gold chart

0127161

Following the cross-over of the 10 and 13 month EMA’s (red/green lines – exponential moving averages) back below the 55 month EMA (blue line) between Dec ‘13 and Feb ‘14, there have been 5 failed attempts by gold to break-out above resistance found at the 10 and 13 month EMA’s.  As the chart shows, each failure to break-out was followed by a sell-off and – eventually – new lows for gold’s on-going correction following the September 2011 all-time high.    

With the April futures contract rallying yesterday up to 1123.60, it was just $2.60 from reaching the 10 month EMA at 1126.20 and officially starting gold’s 6th attempt to break-out above long-term overhead resistance.  Furthermore, when viewed from a short-term perspective, our on-going comparison between the 1971 silver market ‘correction’ and the current gold market correction (highlighted in numerous gold updates) also suggests gold could be approaching a high for this counter-trend rally off the Dec 17 low close (see charts below):

September 1971 daily silver chart

0127162

[Our comparison between this Sept 1971 daily silver chart and the April 2016 daily gold chart starts at the Sept 20 Low close for silver and at the Dec 17th low close for gold (see chart below)]. 

Starting at the Sept 20 low close (day 1) the chart highlights the first 5 trading days where silver initially rallies and then drops back down (and closes) at the lower end of the daily trading range on ‘day 5’.  To highlight the next stage of the rally, note where ‘day 5’ is also highlighted as ‘day 1’ and – here again – there is a 5 day count where silver initial rallies but then closes on ‘day 5’ at the lower end of the daily trading range.  To highlight the final stage of the rally off the Sept 20 low close, note where ‘day 5’ is also highlighted as ‘day 1’ and the final wave of the rally ends on ‘day 7’. 

When comparing this rally off the Sept 20 low close to the gold chart below, note where ‘day 4’ was the initial high for the rally and ‘day 7’ traded slightly above the high on ‘day 4’.

April 2016 daily gold chart

0127163

[Note: The key difference between the Silver rally off the Sept 20, 1971 and this gold rally off the Dec 17 low close is gold has taken approximately twice as long to get to yesterday’s high then it took silver to reach its initial high on ‘day 4]. 

In the gold rally that started at the Dec 17 low close (day 1) the chart highlights the first 10 trading days where gold initially rallies and then drops back down into low on ‘day 10’. To highlight the next stage of the rally, note where ‘day 10’ is also highlighted as ‘day 1’ and – here again – there is a 10 day count where gold initially rallies but then – once again – sells back off and closes on ‘day 10’ at the lower end of the daily trading range.  To highlight the lastest stage of the rally off the Dec 17 low close, note where ‘day 10’ is also highlighted as ‘day 1’ and yesterday is highlighted as ‘day 8’.  [Effectively, silver’s first two 5 day counts and rally into the initial high on ‘day 4’ equal gold’s first two 10 day counts and rally into yesterday’s high on ‘day 8’]. 

The bottom line:  Gold’s major resistance is just above the market at the 10 and 13 month EMA’s (1126.20/1141.10) and – when compared to the 1971 silver pattern – gold would also be close to ending its rally off the December 2015 low close.  However, with the daily chart now ‘positive’ (10 and 13 day EMA’s positioned above the 55 day EMA) and gold close to making its ‘6th’ attempt to break-out above major resistance, we are in no hurry to short this market.  Instead, we will wait to see if gold is able to drop back down to test the 1100.00 price level for a ‘low-risk/high reward’ trading opportunity from the ‘Buy’ side of the market.  For now, unless gold closes (weekly) back below the 55 day EMA (1093.00) we will be looking to trade this market from the ‘Buy’ side while - at the same time - watching to see if gold’s ‘6th attempt
to break out above major resistance proves to be something different than the previous 5 failed attempts.      

If you would like to see all of our futures newsletters, please click the link below.
http://www.msttrading.com/contact/

As Always, plan your trades and trade your plans

 

Main Street technical support

Note: Futures & Options trading involves a substantial risk of loss and is not suitable for all investors and past performance is not indicative of future results. Please carefully consider your financial condition prior to making any investments.



Recent articles from this author



About the author


Main Street Trading is a  commodity brokerage firm offering both full service and online trading.  We specialize if customer service, communication and educating one to more confident trading objectives and decisions.  We provide newsletters with contemporary examples and expectations based upon technical indicators.   Please call us to speak with a senior account executive.

www.msttrading.com

800 748 5083

Published by Barchart
Home  •  Charts & Quotes  •  Commentary  •  Authors  •  Education  •  Broker Search  •  Trading Tools  •  Help  •  Contact  •  Advertise With Us  •  Commodities
Markets: Currencies  •   Energies  •   Financials  •   Grains  •   Indices  •   Meats  •   Metals  •   Softs

The information contained on InsideFutures.com is believed to be accurate but is not guaranteed. Market data is furnished on an exchange delayed basis by Barchart.com. Data transmission or omissions shall not be made the basis for any claim, demand or cause for action. No information on the site, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any futures or options contracts. InsideFutures.com is not a broker, nor does it have an affiliation with any broker.


Copyright ©2005-2019 InsideFutures.com, a Barchart.com product. All rights reserved.

About Us  •   Sitemap  •   Terms of Use  •   Privacy Policy