Gold: Take Profits at $1330, Beware the London Spoof
Posted by Vince Lanci on August 29, 2017 3:32 pm
Tags: Bollinger Bands, Day trading, Goldilocks, Momo, Share trading, Volatility
Categories: Bollinger Bands Day trading Economy Goldilocks Momo Share trading Volatility
Update 12:45pm – if we do not hold the $1312- 1310 area in spot there is a lot of trouble ahead.
The 60 minute is looking at an inflection point in the area:
Breaking $1312 on the 60 minute chart puts us outside the bottom band, and would likely increase all BBand widths implying accelerated downside movement, aka a reversal. Inflection point to say the least.
Meanwhile the daily shows the same area as an outright negation of today’s momentum higher.?The Upper BBand comes in near $1312 currently. A settlement inside that adds fuel to the 60 minute chart above
Expect more profit taking if we get below this area. Pray some buyers have not gone to the market and are waiting for this dip to buy in. If stops exist, expect Commercials to gun for them here.
Take Profits Now
posted originally on marketslant.com
Big players like Soros and Druckenmiller use liquidity events to get out of massive positions all the time. This is another example of where these types may sell into strength. That does not mean the market will not continue higher afterwards. it does mean profit protection is mandated when gorillas like these are entering a room. If we do not close weaker today, beware the London Open for a large profit booking as the past has shown us. Many continue to call this a spoof, and sometimes it genuinely is. We think Friday’s Comex activity was one to shake out momo longs and help commercials cover some shorts. But it is prudent to accept that some of those big orders seen during London hours are genuine profit taking by players not worried about $5.00 when they are booking $55 in 2 months
Yesterday, via Moor Analytics we gave you the road map ahead. Admittedly we did not think it would happen so quickly:
August 21st : We wanted a bull flag
We wanted a bull flag to form starting with a selloff early last week, as opposed to the one at week’s end, and said as much on Aug 21st;
Ideally, over the next 3-5 days: we wanted to see Gold fill the Comex gap underneath, and in the process shaking out some weak longs and luring some shorts to pile in. First touching the $1285 area, close with a positive settlement on a lower day. Then we could see a nice orderly rally out of a bull flag. But so far that is not the case. Instead we have more buying at the top end of a range that has earmarkings of Friday’s behavior.
Aug 28th: We got the Bull Flag
Our time frame was good. Our order of events was not. The rally / dump 2 Fridays ago did spook us, but last Friday’s sell-off and rally undid that. The Comex gap got filled underneath as we wanted, and the market closed positive on the 25th, leaving a tail of sellers trapped below. Happy to be wrong timing wise here about the momo money bailing.
Michael Moor’s Next Steps:
Paraphrased with our comments in italics
- Areas of possible exhaustion for this move up come in at 13143-237 and 13466-556 – We have moved through the first area of congestion overnight
- Take profits in the $1330- $1332 first time up, reverse on a break above with a $1336 target – Some profits should be taken on speculative portfolios long from the $1285 area or lower. We do not think trailing stops will serve specs well here.
- Buy to cover shorts in the $1321 area first time down. – if you are getting short in the $1330 area with a $1332 stop, we like this advice
- There are multiple resistance numbers that may be broken early, only to serve as accelerators of profit taking on a re-piercing lower – This may be a strong hands to weak hands day
For additional information contact: Moor Analytics
Our 2 Cents
Comex Futures now have a Gap between $1317.80 and $1318.90. To those who ignore gaps as Gold is a globally continuous market, we get it. But to those who trade in one time zone, they remain relevant when applied consistently. We’d be hesitant to buy that gap if tested because of our own volatility based trading style, and would rather buy it upon a break under adnarally back through $1321.
Bollinger Bands show us that if one were playing the momentum game it is prudent to remain long until a settlement occurs within the outer band. This comes in currently at $1321 now, and is consistent with Moor’s levels. Any breaking of that level, especially late in the day does not give us a good risk reward in which to buy. We’d rather short in the gap with a stop-loss and reversal set at $1321 for a day trade.
- Take some profits near $1330-1332 if you were long from the $1285- 90 range
- Take more profits if the area of $1346 is reached
- Leave a tail in the form of long calls or a small position that wont kill you on a $20 move lower overnight.
- Buy $1321 area for a bounce back to $1328- $1330. Risk a $1317 print
- Short here at $1325 with a buy stop on new highs with a target of $1301 ( do not take home if out of the money on close)
Gold is Goldilocks regardless of the next $50 move… keep the faith and let the momo guys create short term opportunities for you now.