Follow up chart on Gold (Trade Management)

There are comments from me at the very bottom of the prior post that should be reviewed in this section.

Basically what I said there was that this is a perfect example of why it doesn’t pay to be early in anticipation of breakouts.  Notice the grey trendline that failed on the 30 minute chart at the major multipoint trendline resistance.  There is a great lesson in “Trade Management” here.

One thing that the 30 minute chart is starting to resemble is a bearish “Rounding Top” formation.  It hasn’t rolled over all the way, but I can intuitively see it as a development to keep an eye on.

However the blue downward sloping horizontal trendline resistance on the daily chart is the big deal at this moment in time.

There is nothing “Hocus Pocus” on this chart or some type of “Black Box” being used to predict price moves.  The chart is a graphic representation of the dual auction taking place in gold futures.  The chart is one step where we can identify trade locations from a perspective of probabilities for an increase in supply or demand, and where we can apply sound “Risk Management”.

I’m going to beat a dead horse here, but it is worth repeating, it doesn’t matter to me what the “real world expert” say’s or what a “technical indicator” signals when it comes to “trading” or “analyzing the auction”.  What is seen in the chart is “Truth”.  I don’t care what the Fed does today what I care about is how I react to what the market is doing.

One last chart I want to show, which I mentioned to Ed Steer yesterday, was the divergence in the industrial metal Copper to Silver, and the divergence in the Dollar and Gold.  Gold and Silver were relatively weak in comparison and showed no correlation.



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