Author Archive: Scott Pluschau

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Gold in a precarious position

Gold in a precarious position

There is a balance area tightening in the smaller degree 1 hour timeframe over the past two weeks.  This demands my attention normally, but since we are on major support of a “Descending Triangle” that has potentially lethal ramifications to the price of gold I am on high alert for extraordinary trading opportunities. Today there was a big rally off support which is both Bullish and Bearish.  How is “both” possible?  Well it shows that there is still strong demand down here and potential “Accumulation”.  The downside is that each time support gets tested it is weakened.  How does support get weakened and not strengthened when it has been tested numerous times?  Because the demand or buying power gets depleted/frustrated or […]

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Gold on the verge of a new phase of development?

Gold on the verge of a new phase of development?

Let me start by saying I completely understand that there are valid reasons to buy gold for the long term as insurance and for savings.  I also don’t make trading decisions based on fundamental analysis. Futures trade in a two way auction.  Price is determined only by whatever amount someone is willing to bid or offer at a given moment.  This is the truth.  If the fundamentals are bullish, and the auction is bullish, a good trader is only going to be on one side of the trade, the right side.  But if the auction is bearish what good are fundamentals?  An Auction Market Analyst knows that the fundamentals will come out eventually, but by the time […]

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Target 2 reached in Silver

Target 2 reached in Silver

The second target for the bearish “Head and Shoulders” pattern on silver was reached for greater than $25,000 per contract.  The target was using “Measured Rule”, which takes the distance from the top of the head to the neckline, and adding it onto the breakdown point. My previous post on silver and the first target of the “Descending Triangle” being reached for $11,000 per contract can be found here. Once again a trailing stop loss put in any place other than what would have invalidated the trade idea or confirmed a reversal, (such as a fear of losing profits) would have been brutal had it been stopped out prior to the target being […]

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Target reached on the gold price

Target reached on the gold price

The “Measured Rule” target of the “Symmetrical Triangle” has been reached for $7,000 per contract (See daily chart right hand side below). Measured rule takes the distance from the first reaction in the triangle and adds it onto the breakdown point for an initial profit taking target. This seems to be about the distance it takes for traders on the wrong side of the “Open Interest” to unwind their large losing positions that were built up within the pricing pattern AND for the winning short traders to continue piling it on in going for the “jugular” before the profits get taken and the losers get cleaned out. The market at times seems to return back into […]

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Gold Miners, Junior Gold Miners & the Metals and Mining ETF’s

Gold Miners, Junior Gold Miners & the Metals and Mining ETF’s

Since I posted earlier today some commentary on global “Exchange Traded Funds”, I thought it would also be a good time to share analysis on the Gold Miners ETF.  I often get asked questions on mining stocks since I frequently post on the precious metals futures.  This prior blog post of mine on the gold miners ETF is definitely worth a review here. In that post I discussed in detail the current pattern that was developing in GDX “prior” to the breakdown.  What I mentioned then was that GDX formed a “Broadening Top” formation, and in my experience a broadening top could be either a continuation or a reversal pattern.  However, the breakout was likely to be a strong signal. There is no reason from […]

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Target 1 reached on silver and update on gold

Target 1 reached on silver and update on gold

The initial profit taking target of the “Descending Triangle” pattern of the daily chart (right hand side below) on silver has been reached.  The “Head and Shoulders” pattern on the daily chart is still in play. Getting stopped out in noise or randomness for trailing a stop for no other reason but to protect a gain would have been brutal.  The profit from a swing trade in the descending triangle was good for approximately $11,500 per contract.  I discussed  “Trade Management” in the last post on silver here:http://scottpluschau.blogspot.com/2012/05/trade-management-in-silver.html I don’t take pride in pointing out patterns “after the fact”.  Anyone can do that.  I do it because these patterns have a history of repeating themselves and I believe […]

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The intermediate term trend in Gold has changed …

The intermediate term trend in Gold has changed …

… for the time being. In my opinion gold has now put behind it the bearish downward sloping “channel”.  Is this bullish because it is no longer bearish?  No.  What gold has developed is a solid “Symmetrical Triangle” which is neutral.  Symmetrical triangles can be continuation patterns or a reversal patterns.  I touched on the possible forming of trendline support in my prior post on gold here:  http://scottpluschau.blogspot.com/2012/05/follow-up-on-gold.html What is a symmetrical triangle?  A pattern that shows a tightening in the battle between the Bulls and the Bears.  This pattern can clearly be seen on the daily chart below where I have drawn grey trendlines.  The downward upper sloping trendline in the triangle shows increasing supply with each […]

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Follow up on Gold Price

Follow up on Gold Price

Gold got to peek above the trendline in the downward sloping channel and looked poised for a solid breakout with a few days of solid momentum behind it.  Then the rumor was a “fat finger” trade came in, conveniently smashing the gold price safely back down inside the bearish channel.  Pure coincidence?  I don’t know, but as I always say I don’t care about manipulators, I only care about objectively analyzing the auction.  Once gold came back down inside the channel it’s time to step aside for me and wait for something new to develop using my methodology.  I’m in no hurry.  Good opportunities to trade will come again as always. From an auction […]

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Gold is on the verge of a change in trend

Gold is on the verge of a change in trend

Gold climbed a set of stairs for most of today’s Comex trading session on the 5 minute chart, and is at the upper trendline resistance of a perfectly parallel downward sloping channel on the daily chart.  If gold breaks out on a surge in volume I will be extremely focused on trading gold to the long side until there is a reversal or my near term price target of $1,722 is reached. A breakout of the channel could lead to sideways action, or range bound trading (Horizontal Development), but in my opinion the break will be something the Bulls need in order to consider trading gold again to the long side with any conviction.  I certainly won’t be looking to trade […]

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Bull Hammer in Silver

Bull Hammer in Silver

There was some major downside price rejection yesterday in Silver which can be seen clearly in the bull “Hammer” daily candlestick pattern.  This should make the bears think twice about their prospects.   There is potential here for a near term change in trend, but it is important to remember Japanese Candlestick patterns are useless without confirmation. The problem for the bulls is silver is still trading beneath the breakdown point in the “Descending Triangle”.  This is now a minor resistance area.  The way things look right now, trading to the long side with my methodology would have a “negative expectancy”.  I have no issues watching silver go up today and have zero participation.  I discussed […]

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Dollar Index on trendline support – Gold

Dollar Index on trendline support – Gold

CTKEO?  Charts to keep an eye on. Dollar Index is on trendline support of the “Symmetrical Triangle”.  I touched on the triangle previously in this article and in this article. The Dollar Index is also sitting on its “High Volume Node” on the Daily chart.  This triangle is ripe in my opinion and has potential for “Vertical Development”.  An igniter move lower on a surge in volume may send the longs trapped in the recent Open Interest rushing to the exits which can intensify the price action to the downside if the longs have weak hands using leverage.  The strong handed commercials have been consistently on the short side of the contract when viewing the latest COT […]

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Bearish pattern of the day – Silver

Bearish pattern of the day – Silver

Silver has formed a “Descending Triangle” on the daily chart.  A descending triangle shows decreasing demand and an increase in supply with each rally off of a fixed level of horizontal support.  When the demand at that level has been depleted, the floor underneath can collapse with new supply (those who were long in the current open interest throwing in the towel) and old supply (the previous sellers piling it on to make it hurt good). We are below the “High Volume Node” on the daily and the 1 hour chart.  Putting on a a long or a short position right here with my methodology is playing with fire. False breakdowns are the strongest […]

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Gold and an update on Silver and Copper

Gold and an update on Silver and Copper

I have been saying this for some time that gold’s fairest price or current value in terms of auction market analysis is $1,650.  I am aware of the “fundamentals” for precious metals such as “increasing currency supply”, “paper assets”, “debt”, “default” etc, but the fundamentals are for “investing” NOT “trading”.   If I trade by listening to any other voice other than the market, I know I am finished in this business. With that being said I have been fortunate to have stayed away from gold due to the structure of the daily time frame.  I am sure there are other traders who can scalp, or slice and dice for ticks, reverse positions in an instant.  But that […]

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Silver bulls are hanging tough

Silver bulls are hanging tough

The consolidation pattern I have been pointing out in silver that had been forming over the past week initially had a breakdown in the face of a “Head and Shoulders” on the daily chart.  It doesn’t get much more bearish than this near term in my opinion.  The turnaround here was quite an impressive showing by the bulls, and that is also as bullish as it gets.  Failed patterns are the strongest signals. After some further tightening of the price range and further tension had built in the latest open interest, silver had a breakout to the upside on a surge in volume.  Sometimes it can take 2 or more attempts to make […]

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