Wow! Huge Gold Bearish Price Action – Lower Prices Expected To Follow
Last US session was a carpet bomb of heated news events coming out of the FED. Interest rake hikes, FOMC statements and a plethora of economic data.
Gold is very sensitive to USD news, as Gold ounces are quoted in USD – well that’s at least how we classically trade it. (GOLD/USD)
I don’t worry about the news, I don’t try to predict numbers or jump on trades in the middle of news volatility – that’s a fools game for a retail trader. I just work with what the price action on the charts communicate to me.
That large string of news really injected a lot of volatility into the Gold, and silver charts – with the final outcome being a very bearish situation.
When you look at the daily chart, the first thing that will slap you in the face is the very large bearish rejection candle standing very authoritatively on the chart. This alone suggests we likely to see lower prices.
The rejection is also coming off lower highs, which is a signature of a weak market.
But I can hear the technical analysts out there screaming “it’s on support!”
Well that support level is on a ‘minor’ level relative to what’s in play here, and has been used as a swing level in the past – it’s not really a major turning point.
The major turning points I have highlighted on the chart – those are the levels you do not want to trade ‘through‘.
What makes this setup more valuable is the situation on the weekly chart.
As I become older and wiser, I turn to the weekly chart more and more to grab a directional bias, whereas many years ago I had tunnel vision on the daily chart.
Doing top down analysis on the weekly chart has saved me from many losing trades, which looked like a great swing trade on the daily chart, but a terrible idea from the weekly perspective.
The gold weekly chart shows a clear bearish rejection of the major resistance level. Weekly levels + weekly price action signals are a force you don’t want to go against.
Trading against the weekly chart in my mind is like looking for coins on the highway.
The bearish rejection on the weekly chart is a very strong indicator that lower prices are to be expected. The bearish rejection candle on the daily chart is demonstrating continuation of that weekly reversion signal
A very powerful combo.
Because the daily candle is so large, a pull-back limit entry may be the best way to get into this trade at a decent price, and to tighten the stop.
Best of luck on the charts.