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Outside Day Reversal in Gold Enticing Bulls


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Strategy of the Day 11.18.2019

Outside Day Reversal in Gold Enticing Bulls

Gold futures have traded back through highs of the day, after making a low of 1456.6 in early trading. This constitutes an outside day reversal pattern to the upside, if the market can close positive AND take out highs of today (tomorrow, would be the confirmation). While Gold prices have remained under pressure into the fourthquarter of this year, the near-term price action suggests a technical short covering rally back to test resistance at 1485 next. The outside day reversal is one of my favorite patterns to trade, as it exposes a snapshot of market participation which trapped a group of traders on the wrong side. The psychological effect of the head fake low, typically results in a short covering squeeze which creates the most pain for the market participants.

While the medium-term trend is still lower for Gold, the short-term rally will put pressure on those short and should take the market higher to test bigger more robust resistance (if the down trend is going to resume). My long-term opinion is that Gold will have another leg lower towards...

Dan's full Strategy of the Day is available for PDF download:

http://intranet.zaner.com/uploads/dhussey/SOTD/SOTD_11.18.2019.pdf



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About the author


Dan began his career in 2006 as an arbitrage and clearing clerk for Spyglass Options in the Eurodollar futures options pit on the floor of the Chicago Mercantile Exchange. Taking his employing brokers advice, Dan soon left the floor to pursue a career “behind the screens upstairs”, as there was an inherent lack of opportunity for market making in open outcry pits. After graduating from the University of Notre Dame in 2009 (and for the subsequent 10 years), Dan leveraged his IT background in networking and computer programing to begin developing computerized trading algorithms and trading systems for multiple private equity firms and his own account. He eventually found his specialization in trading carry trade dynamics in currency and interest rate futures; while simultaneously building his experience in trading both inter-market and intra-market spreads. His trading experience later expanded to include most commodity spreads, with an emphasis on carry trade economics in agricultural commodities. In 2016 Dan decided to take his career full circle by becoming a series 3 and 34 licensed broker; and expanded his outreach to the agriculture production community. In 2018, he joined Zaner Financial Services Ag Hedge division, bringing his knowledge and expertise of carry trade economics and continues expanding exposure to spread markets. Dan can be reached at (312)277-0110 by phone, @DanielHusseyJr on twitter, @DanSOTD on facebook, and emailed at dhussey@zaner.com.
 
 
Contributing author since 2/15/2019 

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