Author Archive: Scott Pluschau

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Gold gets rejected at resistance

Gold gets rejected at resistance

Since gold flushed out some traders on the previous bearish “Head and Shoulders” pattern that was pointed out on the blog last week, gold made a rally to the prior support of the “Balance Area” around $1,755 an ounce and this acted as strong resistance. I would have never guessed that over the past six weeks I would not have had a single entry for a swing/position trade in gold to the long side in the model swing/position trade portfolio, but there has not been a single order executed with my methodology.  There is nothing wrong with preserving capital for future opportunities. The last COT report in gold this past Friday showed the longs […]

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Gold is at a cross road: What to look for

Gold is at a cross road: What to look for

I have been looking to put on a swing or position trade to the long side in Gold for the past five weeks but have been unable to do so. There hasn’t been a pattern that I felt offered me a favorable trade location in regards to risk and reward in order to justify that entry. The bottom line is preservation of capital in speculating. There are two conflicting patterns in gold right now: The 30 minute chart has a Bearish “Head and Shoulders” pattern that developed over the past ten days and can be seen on the left hand side chart below. A failed pattern is a very strong […]

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Chart of the intra day – Gold

Chart of the intra day – Gold

I have not put on a “swing/position” trade yet in Gold since starting the subscription based service on September 9th, 2012.  I am biased to the long side, but a favorable trade location for a swing trade hasn’t presented itself in regards to probabilities, reward and risk with my methodology.  It has been wise over the past three weeks to stay on the sidelines in that respect. As far as patterns go, today there was a textbook bearish “Head and Shoulders” pattern on the 5 minute chart below with the “measured rule” target getting nailed quickly. I would prefer to see the 1,755 area of previous support in the daily timeframe get tested, and a […]

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The current phase of development in Gold

The current phase of development in Gold

The daily timeframe is a picture of “Horizontal Development” in the Gold futures (see right hand side chart below zoomed in for six months).  The highlighted blue “Rectangle” is a Mature Balance Area in Auction Market Theory.  The balance area is a range of current value with the upper extreme being an “unfair high” and the lower extreme being an “unfair low” among market participants in a given timeframe.  “Responsive” type traders fade this range.  “Initiative” type traders are looking for the breakout into trend.  The higher probability trade for either trade plan would be with the prior trend. Is there a specific level that I would buy gold?   My answer is to never commit to […]

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Chart of the day on September 14th – Gold

Chart of the day on September 14th – Gold

Open Interest and Volume are both rising together on the daily chart in Gold, which historically has been healthy for a continuation in the trend.  See right hand side 6 month daily chart below.  I don’t have any near term resistance other than the round number 1,800. The 30 minute chart, see left hand side below had two 30 minute bars with approximately 50,000 contracts traded in the past six trading days. Open Interest increased in Gold futures 5,594 contracts yesterday, so this rally is not primarily “short covering”.  You cannot have an increase in short covering with open interest rising.  New shorts on a NET basis are being placed, with new longs, […]

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Bull Pennant forms as the Triangle target gets nailed in Gold

Bull Pennant forms as the Triangle target gets nailed in Gold

Gold finishes the week with a “high and tight” continuation pattern going into next week known as a “Bull Pennant”, see one hour chart left hand side below.  The chart work has been text book in gold for quite some time with the most recent being the breakout to the upside from a multipoint channel on the same one hour chart.  What made the breakout from the channel so significant is that it took place above the prior “Major” trendline resistance of the “Descending Triangle” on the daily chart.  Prior trendline resistance can act as support, see right hand side below. In the big picture, the upside breakout of the descending triangle had a classic “Throwback” and […]

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Patterns of the day – Gold and Silver

Patterns of the day – Gold and Silver

Gold found support at the backside of the “Major” descending trendline, (see right hand side below), and it coincided at the same time with support of a perfect parallel channel that formed over the past week on the 30 minute chart, (see left hand side below).  I strongly believe that identifying these types of chart developments increases the probabilities for trading success. The way things stand now, the odds of triumphantly trading on the long side of the gold contract are increasing. In my last post on gold I felt that piling in on the long side with the break of the major trendline was “rolling the dice”.  There is always a potential payoff in […]

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Precious metals update

Precious metals update

Gold is now at the backside of prior “Major” trendline resistance, see right hand side chart below.  The bulls do not want to see a breakdown from here.  I mentioned in the previous post on gold that the breakout to the upside from the “Descending Triangle” pattern was not a signal to buy for the intermediate to long term for me.  I believe that risk is high in relation to probabilities of a new bullish trend developing in the daily timeframe.  Those who think that this trendline break is the “all-clear” signal to buy are “rolling the dice” in my opinion.  In the meantime, should the backside of this trendline hold as support, things start to get more interesting from a bullish […]

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Dollar Index is losing trendline support – Gold is breaking out

Dollar Index is losing trendline support – Gold is breaking out

The Dollar Index failed to hold the rising trendline support of the triangle on the near term 30 minute chart, see left hand side below.  This trendline was identified early in this past weekend’s update on the Dollar Index. The dominant pattern is still the bullish “Cup with a handle” on the weekly chart.  The Bulls are struggling with the extended neckline support there and failed patterns are very strong signals. The link to this past weekend’s update on the Dollar Index can be found here. Moving on to the precious metals, they are breaking out of chart patterns that were identified in this past weekend’s updates as well. The latest post on silver from last […]

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Silver – Trade Management

Silver – Trade Management

Brief important update:  Silver had a nice breakout from the pattern that was identified and laid out in this weekend’s update and the details of that post (which don’t include any “Fluff” or “Voo-Doo”) should be reviewed on the link provided below. The break would be more bullish if there was more volume, but these last two weeks of August are typically slow. Drawings for the “Trade Management” have been updated on the 3 month daily chart left hand side below.  Barring a catastrophic gap down, the risk is now quite small with some decent upside potential. These are the types of trades that will be shared in greater detail with my methodology […]

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Weekend Update – Gold & Silver – August 19, 2012

Weekend Update – Gold & Silver – August 19, 2012

Weekend update – Gold $1,620 is still a key reference area in the near term, but the “triangle” pattern on the one hour chart (see left hand side below) inside the triangle pattern on the daily chart (see right hand side below) is what is most important to me at this time from my perspective.  The triangles are showing a battle of increasing demand and steady supply. I don’t see gold staying in a “range” or “noise” for long, and the “vertical development” afterward is what I mostly want to be involved in as a trader. There are still other major key reference areas to keep an eye on in the intermediate-long term in my opinion.  The major trendlines of the “Descending […]

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Weekend Update: Gold

Weekend Update: Gold

The weekly close above $1,620 was an important bullish development near term in my opinion.  What is so significant about this weekly close? If you look at the price action the prior eight days on the 30 minute chart (left hand side below) you can clearly see that an overwhelming majority of trades were placed beneath the $1,620 price level.  What makes this significant is because futures have a “long” and a “short” for every contract of “Open Interest”.  The bulk of contracts that were placed on the short side the past eight days are losing money.  If these short term traders in the “new” open interest are using leverage, they will begin to second guess their bearish […]

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Gold pattern turning more bullish

Gold pattern turning more bullish

The consolidating “Symmetrical Triangle” has now morphed into a more bullish triangle.  An “Ascending Triangle” is the most bullish triangle pattern and we are somwhat in between.  There is a sign of increasing demand in the charts. In the near term the 30 minute chart has a “Concrete Ceiling” at $1,620.  There is a determined seller or sellers here lately.  However each time a resistance level gets tested, it get’s weakened.  The ceiling has cracks, and needs a few more hammers and chisels for this level to become strong support.  Basically from my perspective supply has been getting absorbed, and if the demand continues to deplete it, price will eventually launch. I […]

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Weekend Precious Metals Update (Gold and Silver)

Weekend Precious Metals Update (Gold and Silver)

I’m not ashamed to admit it; I took a net loss day trading gold since the breakout of the triangle pattern on the daily chart.  My trade setups were right, and there is ZERO regret.  Looking back I did nothing wrong.  While there is no way to control how much we make on a trade, we certainly can control our losses.  Any trader who thinks they can be right all the time is going to have a tough time with the ego, which leads to a host of psychological issues and down a path toward ruin.  My net loss in gold is less than 3/4 of one percent of the capital in my current trading account.  The potential reward was a […]

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