Brexit is coming, Gold on the other hand said “NO BREXIT” but instead has a BULL TRAP.
A fascinating shift in the market where physical gold is beginning to lead the futures market. The demand for physical Gold has been increasing over the past few months, leading to support increasing as gold is reaching new highs. The key is in the charts and we can see that there is a bull trap that was sprung recently off of the highs. Let’s check the charts.
The Monthly gold chart shows the major down trend with a declining wedge. The past 3 months have consolidated between 1210 and 1300. This past week we saw price head to a new high at $1318 an ounce. The past three months volume is staying pretty high and consistent.
We are presently below the 200 moving average in Red. On a long term chart this is the key for bulls being in control and getting out of this bear trend. The finish of this trend could occur around some Outlier. The BREXIT seemed like it could be the stimulus which would send us to these new highs and break through the monthly chart but did not pay off as price came $50 off the highs.
The weekly chart in Gold also sets up nicely with some tells.
Bull TRAP reveals itself in price failure over 1300 on reversal from high and increasing sell side volume.
Gold prices above $1300 an ounce were met with selling as price moved towards last weeks highs. Buyers could not hold their ground as increased sellers moved price lower and then a move of $36 an ounce down into the pre Brexit vote coming tomorrow. If this isn’t a bull trap, then we might see this resistance shattered and a move to 1363-65 area and a further move to 1385 then 1450 if there is a BREXIT. As of now the buyers have lost their steam and we could see a test to previous swing lows at $1200.
Follow up from BREXIT vote count, looks like the Bull trap was actually a set for breaking to new highs. We can’t tell yet.
Here is the follow up chart.
Entry at 1260.
Monthly Trading Plan S&P500 on a Financial precipice seeing direction on a monthly trading chart.
March 30, 2001 we have a cross with divergence showing us a 600 point sell off from highs.
December 31, 2003 Bullish cross with a 700 point rally to the up side..
July 31, 2008 a bearish cross with a 900 point sell off from highs.
April 30, 2010 bullish cross with a 1450 point move to the upside.
May, 2016 upcoming cross or continuation to the upside?
We shall see.
Standing on this what is considered to be an over bought market, where the markets have bought too much, risk is not represented with a 0% interest rate, and a Central Bank policy of never ending printing and purchase of bonds and stocks. A reversal may not occur.
The question is: What kind of intervention will we see on the next sell off?
Will the Fed save us if we retrace to previous support and then sending us on to our next round of highs for 4 more years of corporate expansion?
Upside target of 2950.
Is this our reality? If you see that the market has direction then buying the dips could be part of the monthly trading plan.
Reality hits the markets – targets for a falling market.
If we break the major support at 1800.
If The market reverses, our next major support is 1550 to 1580 then 1350.
Major sell off support at 950.
We shall see.
S&P500 Emini future Trading Plan – As January goes so goes the year. Corona, Ca Jan. 28, 2016
Traders have many superstitions which are backed by some correlations and timing. One of these is: as the first day of market goes so goes the week, so goes the month and so goes the year. If this is the case then this could be a down year for the market. We have a few more days to go so we shall see.
Inverted Head and shoulders could extend the buyers move up to resistance 1911, 1940, then 1956.
If sellers execute off this possible flag pattern, then we could retest the support at 1865, 1849. then 1804. If the market sells off then watch for 1769.25 as next major support.
Lots of volatility headed into this market with no clear direction in this consolidated area with smaller range candlesticks during this past week.
Will we confirm this past move down to 1804? Will we execute off of support and buyers control the next move up from the Inverted Head and Shoulders?
Conflicting patterns. Short term day trading of support and resistance based on commitment of traders are giving the most solid signals.
Next we look at a trading plan for Gold and how buyers are getting squeezed on all the reversals from lows. News is pushing this market around with a lot of volatility. If you are new to trading it is best to stand on the side and practice your entries and stop management in a simulated trading account. There is no real direction in the market with a lot of media claiming we are oversold. This could be a consolidation zone where the market is resting to gain strength either for a reversal or continuation of the move down. We will see who commits to the direction of the market soon as our daily price range is decreasing.