Gold Futures Faking the Bulls - For Now

Ilan Levy-Mayer |

Gold Futures recently made a nice spike towards the $1200 mark and provided some false hope for the gold bulls as the market turned around and gave back almost all of its gains.

In the past gold was moved many times by fears of: (circle your favorite)

A. Inflation fears

B. Political unrest

C. Tight Supplies/ Governments selling their Gold

D. Public Affection

E. All of the Above

Well, all of these can be true at one point or another and were true at some point. As I am writing this towards the end of 2015, I believe that the main factor influencing gold right now from the fundamental point of view is technical...I get the feeling that until something big happens in the world (see points A through E above) that gold is pretty much NUM....it is reacting strictly to charts and large traders moves.

What Does this all Mean to you as a Trader?

You have to do some work or in this case you can check out my work. I am going down from the monthly chart to the weekly chart to the daily chart trying to find either a high probability set up or a longer term view.

Monthly Chart of Gold

151104_Gold_(Globex)_Monthly_Continuation - 11-6_1.png

What I see here is consolidation after the big drop over the last two years but still in small downtrend yet oversold readings (lower indicator). Based on the monthly chart I do see a potential for longer term target of $947!

Weekly Chart of Gold

151104_CE___Gold__Globex__Weekly_Continuation__11_6.png

What I see here are moves down, followed by spikes that fail to take previous highs while moves lower take out previous lows. Again, a bearish sign. This time this market has to hold $1,108 first (doubt it...) but main level to watch is previous low at $1,072.30.

Last Step, Daily Chart of Gold Futures

151104_Gold__Globex__Equalized_Active_Daily_Continuation___11_6.png

The daily chart is the only one that is giving me some clues that we may see a reversal up as long as we can hold the levels where we are trading last few days ($1,108 to $1116 as of Nov. 4th). The RAL indicator showing oversold conditions with a possibility of turning up (lower indicator). Daily trend line shows possibly holding up....

So after observing all 3 charts my thoughts are that one has to play the ranges until either major support ($1,072) or major resistance ($1,232) are taken out. I think that using oversold/overbought indicators such as RSI may be useful for this type of approach. Choose your time frame, understand your risk, practice tolerance and be patient.

If you are not familiar with the risks associated with futures trading and/or options on futures, I recommend you visit our broker assist services and get help creating a trading plan.

Disclaimer - Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

 

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