Well, sorry for butchering an expression, but everyone and their kid is talking gold, which helps price. I’m happy.
I’m going to share with you a quick note, and just tell you what happened at 10.30 pm HKT (am in New York) and why gold won’t retrace past US$1880/oz in the coming few days. This will be long enough to establish new technical levels without the $1917 level looking like a volatility peak.
At that point, and for about 25 minutes prior, gold traded very unnaturally. Previously, there had been a 1.2% rise (not rally) in about 70 minutes, and it peaked squarely at 10.00, only to fall very consistently, very orderly with 80% sell candles in that period, summing to about $8 of declines, unaffected by the 20 EMA which is one of the key shorter term levels no matter what time your candles chart.
This does not happen during the markets we have these days. Speculative traders don’t go for a 1% per hour trade and then unwind at 0.7% per hour irrespective of key support/resistance lines. You’d find much better stuff in the indices. So I looked at different time frames, and here’s what struck me. Pull up your own charting tools and see for yourself.
At this point,, 10.30, price was at $1872, and no matter whether you went for the 30 second time frame, 1 min, 5 mins, up to 4 hours: price was at key technical momentum levels, like a 20 or 60 EMA (minutes/days candles, change to 24 or 72 for 1 or 4 hours) or a long period 2.0 upper Bollinger in all those time frames! So what? (1 day or above, even Bollinger shows you’re at +3.0, which indicates that the sample is statistically inadequate.)
This is more important than you think because, essentially, all the technicals that anyone who considers the effect of their trade from 3 months to 30 minutes saw, were bullish. So, you say, the relative strength, directional movement, stochastics, Williams %R, etc, were indicating overbought, screaming sell, and still very much do?
True, but no one cares about indicators that don’t work. All of those are range bound, and who would want a range bound indicator to forecast the breaking of records? (Note: RSI and DMI are not range bound to price, but to performance. You can’t perform much better than 100% up days, and these indicators are seriously broken from data sampling issues at 70-80% either direction.)
So, look up from your ranges, look at the fundamentals (which now is about how much people are talking about it) and throw a quick glance at your momentum indicators. When they tell you to get out, think about if you’re using long enough time frames, then follow their advice if it’s still right.