Gold’s Reversal Candle
Jack Davis | Jan 13, 2017 13:00
Originally published by Chamber of Merchants
My aim is to help the retail trader community think better. To be in an ocean without a lighthouse is no fun, therefore I aim to share some of my insights and observations so that, hopefully, it may aid in decision making. I’m no guru, I have no crystal ball, but I do have a certain approach to trading. That approach mainly relates to overcoming our inherent weaknesses such as greed, fear of missing out etc… So I share this with the hope that it will assist you by being more informed. That doesn’t mean I am right, but the observations I make this morning should be taken into consideration as part of your many considerations.
This morning I’ve woken to 3 immediate alarm bells for anyone with a long trade in the precious metals sector.
h2 #1 Reversal Candle on the Gold daily chart/h2Basically, there was a strong rejection of gold at $1206. I did mention in yesterday’s post that I expect strong resistance and a possible reversal around $1205-$1215. According to the chart above it was rejected at a moving average level.
h2 #2 Silver gave back it’s gains and now sits at support/h2Silver took a long time to move to the upside. And it gave it back in one day. This is a cautionary signal to me. If silver starts breaking lower back to $16.50 then I would expect gold to shortly follow suit down to a support level of $1172 or even $1164 if momentum overshoots. (Not certain, but worth considering.)
h2 #3 US Dollar Bounced off support/h2
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The dollar has not confirmed its decline. This means that generally, gold has not confirmed that it will rally further.
Therefore, while the above are merely observations, I would proceed with caution. That means again, taking some off the table or ensuring I have stop losses.
One can always re enter once the coast is clear.
As for me, I am still out, waiting to enter at a support level where I can commence my next trade for 2017,
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