Technical Trading: Cheat Sheet For Gold Day Traders, Swing Traders and Investors
Tuesday January 19, 2016 09:35
(Kitco News)
Gold prices slipped moderately lower Tuesday morning as oil prices surged back above the $30 per barrel mark. The U.S. dollar index is moderately firmer and global stocks have rallied on the heels of Chinese growth data that was weak, but not as dire as some analysts had expected. Data released overnight revealed that the Chinese economy grew at 6.9% in 2015.
For traders looking for key points to mark out for potential gold opportunities, here's a quick look at what you need to know now.
Very short-term range: The gold market has settled into a choppy, consolidative trade in recent sessions, with nearby technical chart support seen at the January 14 daily low at $1,071.10 and nearby resistance at $1,113.10, the January 8 daily high. In the very short-term, gold has settled into a consolidative range in between those points and action within that range can be dismissed as "noise." This is the range for day traders to monitor.
Bulls control near term trend: A minor uptrend pattern is still evident on the daily chart off the December 3 low and minor bottom at $1,045.40, which keeps the bulls in charge of the near-term trend. A minor series of rising higher daily lows is seen with the Dec. 17 low, the Dec. 31 low and then the Jan. 14 low. As long as the most recent swing low at $1,071.10 holds firm, the minor uptrend pattern will remain intact. This is the trend for swing traders to monitor.
What else do traders need to know?
Not a lot of enthusiasm right now: Current moment readings are fairly lackluster, near neutral. The 14-day relative strength index is around 53% in early trading Tuesday, near the neutral 50% zone. Bottom line? Gold is vulnerable to additional near-term consolidation.
What does this trading environment mean for day traders, swing traders and long-term investors? Let's take a look:
Day traders: Be nimble and quick. Use tight stops. The very short-term trend outlook is choppy, and consolidative between support at $1,071.10 and resistance at $1,113.10. It would take a rally above $1,113.10 to reignite bullish momentum and enthusiasm for a fresh trend move. Intraday conditions are trendless. Be choosey about trading in this environment.
Swing traders: Watch resistance at Point A and support at Point B closely. A renewed rally and close above Point A would open the door to a fresh rally move, with the 200-day moving average line as a bullish target. Declines under support would trigger a bearish near-term trend signal and open the door for a retreat toward the next swing low at $1,056.50, the Dec. 31 low.
Long-term investors: What is your long-term investment plan? Are you looking to add to a long-term metals position? Buying on dips is a good strategy. The bulls are in control and the risk is that more gains are ahead. Long-term traders may want to consider the recent low at $1,045.40 could mark out not only a near-term bottom, but could become a more significant low. Plan your strategy and follow-through on your buying spots.
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