Trend is a blog about global daily, weekly, monthly and yearly market trends in such financial markets as Forex, stocks and commodities as well as various day, swing and Forex trading strategies and ways to invest your money. In the blog I am going to share what happens in these markets on a daily basis. I hope you will enjoy my trend analysis. Welcome to my blog.
I have been watching Gold very intensely recently, particularly, when it approached very important resistance of 1350 last week. When it ran to 1348 and suddenly retraced, I initiated a short position (I sold Gold). Why?
Gold flirted with the level for quite some time and will most likely flirt for some more time. Every time it reaches the level, the price gets rejected and runs to support. From my perspective, this time is no different. I believe we are going to see 1000 level before strong uptrend resumes. We might see a brief run up slightly up 1350, but technical picture on weekly and monthly charts give me a bearish perspective. I will continue shorting Gold (selling it) when it runs to various resistance levels along the road. Of course, I have stop losses, in case I am wrong. But, my profit targets always bigger than stop losses (3:1, 4:1, sometimes even more).
Short term profit target is 1300. I think we will go further to 1200, but not that fast. More waves up and down are in store for us. Anyway, by this post I simply wanted to draw your attention to the fact, that you can play both sides (buy and sell) in any instrument: Gold, currencies, stocks or cryptocurrencies.
Disclaimer: All trading involves risk. Only risk
capital you’re prepared to lose.
Past performance is not an
indication of future results. This
content is for educational purposes
only and is not investment advice.
Both oil and gold have been in a mild uptrend for over a year now moving
up and down in waves. It has been a time where you would have made more money
by buying the commodities than selling them. However, if you are intermediate
or short term trader you might see that playing on both sides would have been a
good choice. Looking purely technically you can spot waves on both commodities.
Taking that into account I will state that we will probably see gold and oil
turn around in August and start trending down. I expect oil to top at around
50.00 this week and gold possibly too at 1270-1275 level.
If you look at gold chart below you can see three finished peaks.
However, the second and the third peak are at about the same price level (the
third is some 30 cents higher). Then you will spot a lower low formed and a
rally right after it. I assume we will now see another leg down, that will take
us lower to 1195-1180 level. I expect the fourth peak to be finished this week.
I have intentions to short gold when I see strong selling on my short term
hourly charts.
TRADE GOLD AND OIL ON eToro Disclaimer: All trading involves risk. Only risk
capital you’re prepared to lose.
Past performance is not an
indication of future results. This
content is for educational purposes
only and is not investment advice.
The same is true with oil. Oil chart actually more resembles head and
shoulders pattern. You can spot around 5 technical peaks in the chart, with the
last two peaks being lower than previous two ones. This leads me to a
conclusion that another peak in oil is due any time soon. I actually think 50
level is the mark and oil may form its first leg down this week. Again, I
intend to be a seller when I see strong selling coming on hourly charts.
At some point both commodities will pick up and start trending up,
because the world geopolitical and economical situation does not look rosy at
all, but for the time being, technical analysis tells me to be on the short
side.
It is no big secret that price action during summers tend to
be range bound rather than trend driven. This summer was no exception. Major
currencies as well as crosses were range bound. gbp/usd has been in 700 pip
range (not a small one) since July, result of post Brexit consolidation after a
huge collapse. As we have BOE coming out with interest rate decision tomorrow
we may see the pair consolidate around 1.3100 area. Next week FED interest rate
decision may send gbp/usd either back to support of 1.2800 or to 1.3500 and
beyond that to 1.4000 or even 1.5000 level.
TRADE GOLD, OIL AND CURRENCIES ON eToro Disclaimer: All trading involves risk. Only risk
capital you’re prepared to lose.
Past performance is not an
indication of future results. This
content is for educational purposes
only and is not investment advice.
eur/usd, on the other hand stayed in much smaller range of
about 500 pips, July and August range being only 400 pips. After FED releases
its’ interest rate decision the pair will most likely gain direction and either
drop to 1.0500 or rise to 1.1700. The most likely scenario is that it will
revisit the lows of 1.0500 before going upwards. A rare, but a possible case
would be for the pair to keep dropping and reaching 2000 lows of 0.8200. That
would have made a full bullish and bearish cycle of eur/usd. Seven years of
rise and seven years of going back to the exact spot where Euro started its’
ascend.
If we look at the gold chart we can also see that it has
been caged in a range for a number of months. One thing is clear that the
commodity is in an uptrend after correcting downwards for a few years. At the
moment, technical analysts and traders can spot a bullish flag forming on 8
hour and a daily chart, meaning that we may see a breakout upwards sooner
rather than later.
It
is obvious that gold has been battered in the last couple of months. However,
most recent price action suggests that gold may rebound in the nearest future. In
fact, the recovery has already started. I want you to look at the chart below
to see for yourself. From 20th of July to 10th of August,
2015 gold has been in bottoming process. The last low on the 20th of
July was quickly rejected as price crashed dramatically and then rose suddenly. TRADE GOLD, OIL AND CURRENCIES ON eToro Disclaimer: All trading involves risk. Only risk
capital you’re prepared to lose.
Past performance is not an
indication of future results. This
content is for educational purposes
only and is not investment advice.
In
the next couple of weeks a process that traders call “accumulation process”
occurred. You can see how price tried to test previous lows on at least 5
separate occasions and failed. Each time buying pressure came and price rose. On
the other hand, price was also rejected at resistance. You can see how the
range was “squeezed” during these couple of weeks. Narrowing range is a strong
indicator that a break will occur sooner rather than later. It often presents the
best opportunities for trading a breakout.
Most
breaks fail and I would strongly advise against trading them. However, when you
see a narrowing range it is one of those rare situations when breaks turn out
to be true rather than false. This type of situation happened on the 10th
of August when price eventually broke the narrowing range and now is rising up
in waves.
Just
by measuring the base of the narrowing range pattern I assume that the minimum
target for the move is around 1143 level (classical technical analysis count).
Of course, price may go well beyond that and it is really difficult to say
where exactly the rise will be over. However, a technical trader would at least
try for the minimum target. Buying on dips seems to be the best strategy now if
initial “buy on a break” strategy was not implemented.
Disclaimer
Trading
financial markets carries a high level of risk, and may not be suitable for all
investors. All information on the blog http://trend0.blogspot.com/ is of educational
nature and cannot be considered as advice, recommendation or signals to trade
in any financial markets.
Gold and oil have been trending lower for quite a while. From fundamental point of view I see a lot of politics going on with both commodities. Due to annexation of Crimean and turmoil in Ukraine Russia faced a lot of pressure from the West and one of the reasons for fall in oil prices could be just this. I can never be sure about it, but big boys definitely have means to push the price of oil or any other security. Of course, there are other reasons too.
However, no trend continues forever. On the one hand we could see oil going to 60 bucks per barrel and stay at that level for quite a while. On the other hand, we could see gold bottoming in the area of 1000-900 per ounce. You should remember that gold is a currency as well as cash and in such troublesome times as these you should invest in gold. I mean you should possess it in physical forms. Silver is an alternative, of course, if you cannot afford buying gold. At some point, we might see nations collapsing economically due to debts in government sector.
TRADE GOLD, OIL AND CURRENCIES ON eToro Disclaimer: All trading involves risk. Only risk
capital you’re prepared to lose.
Past performance is not an
indication of future results. This
content is for educational purposes
only and is not investment advice.
For the time being, more pressure will be coming to both commodities. If you are a swing trader you should consider selling gold at resistance of 1220-1180 (previous support, now resistance) level down to 1000 level. Selling pressure may come as early as the beginning of next week.
Now, oil is currently at resistance. The commodity ended the week at resistance and you might expect oil to start falling to new lows from these levels. We are in a downtrend and you should only sell rallies when downtrend is in progress. Price may do some topping process at these levels, but I am pretty sure that it will go through the floor sooner rather than later.
For those who need basic Forex education I recommend visiting website http://www.theforexspeculator.com/ where I regularly write educational articles.
Let me continue my series on chart patterns in the
post. Last time I wrote on flags and now I want to discuss about
pennants. In the same fashion as flag, a pennant is a continuation technical structure. It
means that when the formation is broken you will most often see a thrust in the
direction of a previous move. While a flag is a rectangular in shape a pennant
resembles a triangle. It should not be confused with triangle as its duration
is much shorter and it actually is a short respite before current trend resumes
itself. Triangles tend to be longer in duration before they are broken.
As it is a triangle in shape a pennant has two
converging trendlines. This shows that prices are consolidating after a
previous move and now the range inside the pennant is narrowing putting
pressure for price to go out of the pattern and continue the trend. A pennant
will have a pole that would end at the top or bottom of the pattern (depending
whether the pattern bullish or bearish) and it marks the point of the first
trendline that we expect to be broken. As the prices start consolidating the
second point is made that marks the point from which the second trendline is
drawn that will probably not broken and hold counter trend moves.
When you are through with the article, read my other posts on the topic and watch the video below:
Watch a video on how you can trade this specific technical structure:
Bullish
pennants
Bullish pennants are bullish continuation patterns
that break out in the upward direction when the consolidation of the structure is
over. A break of the upper trendline is a sign that current trend will resume
itself after a short break. One should be ready to jump into a trade at the
break of the upper trendline.
How
to trade it
You can look at gbp/jpy chart above to see how the
bullish formation looks like and where you can enter your long trade. After a
strong move upwards gbp/jpy started consolidating and formed a bullish pennant
in a period of four days (from 27th of December 2012 till 31st
of December 2012). The breakout point was marked by 139.28 level which the pair
reached and retraced a little. So, you should have bought the pair at the break
of the above mentioned level. Our stop level was a few pips below the
retracement at 138.87. As you may see the pair broke the level and rallied around
350 pips before reversing and forming another pattern: bullish flag. You could
exit your position in portions at even numbers (if you had two or three
positions) or move your stop loss order by placing them below 4 hour candle
clusters till your stop loss was closed when prices reversed.
Bearish formations
Bearish pennants are bearish continuation patterns
that break out in the downward direction when the consolidation of the pattern
is over. A break of the lower trendline is a sign that current trend will
resume itself after a short break. One should be ready to jump into a trade at
the break of the lower trendline.
How
to trade a bearish structure
You can look at Gold chart above to see how the bearish
pattern looks like and where you can enter your short trade. After a strong
move down xau/usd started consolidating and formed a bearish pennant in a
period of five days (from 15th of February 2013 till 20th
of February 2013). The breakout point was marked by 1600.00 (per ounce) level
which the security reached and retraced a little. So, you should have sold Gold
at the break of the above mentioned level. Our stop level was ten bucks above
the retracement at 1610.00. As you may see the pair broke the level and collapsed
around 45 bucks before finding support. You could exit your position in
portions at even numbers (if you had two or three positions) or move your stop
loss order by placing them below 4 hour candles till your stop loss was closed
when prices reversed. It may have been around 1563 area.
Conclusion
A pennant is a continuation pattern that might help
you to enter extra positions in the direction of the trend or open your first
one if you accidentally missed the initial move. The pattern indicates that the
security is in a stage of rest (consolidation) and the prices will move pretty
soon. In forex market pennants often last five days or even less and present
you with great trading opportunities.
Ok, I will finish now. Be sure to read related
articles to learn more on technical analysis. I promise to expand on this in my
future posts.
I hope you benefited from the post. If you liked the
post I would also be happy if you gave a plus on Google+, tweeted, liked it on
Facebook and other social platforms. Have a nice day.
Vytas.
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Trading
financial markets carries a high level of risk, and may not be suitable for all
investors. All information on the blog http://trend0.blogspot.com/ is of educational
nature and cannot be considered as advice, recommendation or signals to trade
in any financial markets.
