Gold trading update – October 14 End of trading day.
This week gold stayed in a consolidated range at the bottom of a sell off which occurred last week. This happened to co inside with the Chinese holiday and therefore all the Gold bugs starting screaming conspiracy! But, as real traders we know that there are tells in the market when they are given that we can follow. In the Money Maker Edge system we look for commitment in direction of the market. The market clearly gave us the signal before the fall that buyers were loosing strength and sellers could take the direction away.
We have three lower highs with decreasing volume. There is no commitment to take this higher and each swing is shallower on less volume. Once price breaks through the support at$1310 you can see sellers piling on and a very volatile sell into the next support at $1266 support. The consolidation zone around here in light blue is where buyers and sellers have been trapped. The $18 consolidation zone has given no tell as to which direction to watch for the break out.
Gold Trading – Buyers in Control
If buyers move in off this support I am watching for this to return to the 1286-1300 area. It could be a choppy start to this move before we see any commitment. Don’t risk too much for this move, buy when you see commitment and continue in the direction of the trend.
If Gold sellers move in and take this through the support the next area of support is 1230, then 1210 and then 1180 as an equidistant move from the previous sell off. You will notice that the volume is quite consistent in this area with no one taking the lead.
When gold is in a consolidated pattern like the blue zone, watch out for traders to lure the novices in by using a head fake to get the trader to enter at the breakout above resistance or below support. This could be a risky trade as the market might reverse and then blow through your stop in the opposite direction. For instance, breaking above the 200 Moving Average and then immediately reversing and coming back into the consolidation Zone taking out your stops.
Take note of the Red Arrow Resistant Trend line, this is where I am looking for this market to go if buyers do get control. It will also be the area where sellers could move in and the next consolidation zone could occur.