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 a price to enter a trade without knowing exactly what exit is going to be defined for the risk taken.  The risk is always the location where my trade idea has been invalidated by the market and never based on a fixed dollar amount that I can afford to lose, some constant fixed number of ticks, or percentage of the entry price.

I am only interested in a long trade setup.  I’m looking at an entry from a simple enough bullish reversal pattern at the lower extreme of the balance area, or a breakout to the upside from a consolidation pattern near the upper extreme.  I feel there is a good chance a position trade will be taken this week provided I have a favorable enough trade location from a perspective of probability measured to the reward and risk.

Open Interest continues to increase in gold.  The Commercial Traders also continue to pile on their NET short position as of the latest Commitments of Traders Report.  If gold enters another phase of vertical development to the upside out of this balance area, the bullion banks are asking for some mark to market losses in a big way.

Subscribers will be notified of the patterns that are developing in advance, and any trade alerts for the model portfolio will be shared with subscribers. Those who would like to read the prior “weekend update” on 9/23/2012 can email me and I will forward it to you to take a look and see what the service has been like.  Since the new service started three weeks ago there have been over thirty updates emailed with changing or new patterns developing, drawings, support and resistance levels, commentary and analysis shared.
The most recent post on gold in the public domain can be found here.

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