News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Update

Precious Metals Fail to Clear Markers

June 14, 2021 - (Gold Market Wire) - Trading, like most things in life, is rife with contradictions. Separating them out and realizing which part or half of the contradiction applies at a given moment, is critical for profit and survival. So, we carry the maxim "never chase strength" but we also need to "never anticipate" the market. These can appear like contradictions. We have to wait for the market to clear certain markers, but if it does, and we start putting on length - are we not, then 'chasing strength'? The contradiction is resolved by knowing the rhythm of the market at the time.

Recently, we've been caught in the "Box" between $27.43 and $28.13, so getting some length prepared doesn't fall into the "This is IT!" - "Buy with Both Hands!" rhythm and psychology of the strength chasers; those who always wind up in a heap on the floor... the proverbial expired water buffalo. The tenor of the market now is an indecisive grind. In this situation we can see a decent weekly close, where the markers are bettered as a fair risk/reward opportunity: buying small on the close and then adding a bit as we get successive closes above the cleared marker. Unfortunately, Friday was a failure in this regard. Our close at $27.92 (cash) was almost the low of the day, and the horizontal was not better. No wonder we followed through on the down side. We are back in the box, and awaiting an outcome. If we anticipated, without the discipline of the markers, we got hurt. But we waited, so we avoided pain. (Bravo for MOC orders...part of the discipline of not anticipating!)

On Friday, we wrote, "We have only the last two convergent hurdles, horizontal and downtrend to clear. It looks like we are getting ready to do just that." ... and we also re-iterated, "we still have the horizontal to clear, and the downtrend" In short, we set out the markers. We were optimistic that we would make it... but we didn't. We held fire. The discipline worked. And that is what counts in trading - discipline.

Now we can see the results of the failure to clear the markers. The uptrend has failed... and now the lower band of the Box may come back into play. It's already fairly close.

...the downtrending resistance line has held

If we get close to the lower end of the Box, we may try a spec long, after we assess the market at the time. We have a stock market that is meandering and a slightly higher US Dollar. Those are cautions for us, but if they are not in extremis, we can still have a spec long, if the conditions are met. 1.2250 has not been exceeded on the EUR/USD, and that could mean a Dollar resurgence. That is a headwind for the metals. Right now we have touched down of the 50-day moving average, as the chart below shows. Let's see if it holds. Let's maintain discipline.

May 25/26...double top???
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