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Welcome all Safety in the Market traders to this month’s dedicated newsletter. It’s been one heck of month since the last time I wrote something down for this newsletter. How could so many things have happened in the space of a single month?
I left you last month pondering the future direction of the equities markets, with the E-mini S&P500 (ES-SpotV) pushing up against an important 50% ‘Danger Zone’ at 1,278.25. It was telltale whether the market was held up at this level or pushed through. History has gone on to show that the reaction was very small and now the market has headed higher.
Those of you who aren’t part of the Platinum Fast-Track Program missed out on an update in the second article I write for Safety in the Market these days, the Platinum Fast-Track Newsletter. With that newsletter coming out later in the month, we had a little more information on hand and there it certainly looked pretty clear the market was heading higher on the SPI200 (those triple tops did not excite me for short trading). This month I’m stepping away from equities markets and moving back to the unfolding story on Gold.
You will need to review my last article on Gold, which was back in November 2010. There I shared with you the pending arrival of the Gold price at the big picture 150% pressure point which we had been watching for many months. Since that time Gold has slight penetrated this pressure point with triple tops, but these are nothing that could be considered a genuine break of the resistance level. To me the resistance level is still holding.
Chart 1 is a daily bar chart of Gold and shows some interesting action in terms of a 50% pull-back. Platinum traders you again should recall in the last Platinum Newsletter, where I touched on Gold, we were looking for a pullback, after what looks like a decent first leg down off a potential top. This chart extends upon what we were looking at there.
Chart 1 – Gold (GC-SpotV) Daily Bar Chart with Weekly Swing Overlay
click chart to enlarge
The highest high for Gold futures is at US$1,432.5/ounce and that came in on 7 December 2011. I have added the weekly swing chart as an overlay on the daily bar chart (a very handy feature on ProfitSource) and as you can see we have already had a lower swing top formed at $1,424.4/ounce which occurred on 3 January 2011. Since this January high the run down on the weekly swing chart has broken below the last weekly swing low, so the weekly trend is now officially down.
Studying the last little pull-back (up move), this pull-back has formed a Point C on the weekly chart. As you can also see on Chart 1, the pull-back has taken prices back to the 50% retracement level, between the 7 December high ($1,432.5) and the 28 January low ($1,307.7)
Now trading futures off the weekly chart is risky business and involves substantial risk per contract. However it can help with getting the major and minor trends in sympathy. So should a daily ABC short trade present itself soon, probability is that we will have the minor and major trend in sympathy, in line with prices coming off the big picture 150% milestone. This is all very interesting stuff and something that has me in game-on mode for sure.
I am not going to touch on Time by Degrees here, but I do encourage all our Platinum and Gann Jump Start traders to see what you can apply here in addition to the price work we have covered. The situation with Gold at the big 150% pressure point has always had big possibilities. The next few weeks are certainly going to be important, even if the result as the 150% pressure point was broken. For now the pressure I believe is on the downside.
Until next month...
Noel Campbell
Professional Derivatives Trader
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