I’m going to keep this brief. Let’s see if gold can breakout to the upside of this major multipoint trendline on the daily chart with some volume. I am looking forward to what could be many great trading opportunities on the long side of the gold contract as it has been what seems like an eternity to buy gold with any conviction.
It is important to note that I am not prepared to hold any trades in gold for the intermediate term yet. I don’t care if I pay two hundred dollars more an ounce at that future point in time, my primary concern is probabilities compared to the reward to risk, and there never will be any consideration for “price”. Price is just a number for calculating cost using my methodology.
Why don’t I consider price other than for cost? Gold futures move in .10 cent increments (ten cents per tick), which is $100 gains and losses per ounce per contract. Whether I pay $1,600, $1,700, or $1,800 an ounce, what does it matter, the gains and losses will be identical when marked to market for the exact same price movement.
This goes for any contract. For example, a ten point move in the Emini S&P 500 contract is a $500 gain or loss per contract. Who cares if you go short or go long at 1,250 or 1,350, as long as you are on the right side of the ten point move more than you are on the wrong side of it is all that matters.
I first touched on this trendline in this article here.