Gold Historical Price Action.
There is little argument that human nature repeats itself over time. Human nature is also a significant element in trading markets and in turn historical price trends in markets. Thus, market price action tends to repeat itself over time. Longer-term price charts reveal that strongly trending price moves tend to see markets gravitate toward major historical highs or lows and then either pause before continuing the trends or reverse the existing trends.?
The present strong price uptrends in gold (at a record high) and silver (at a 12-year high) show no early technical clues of market tops being close at hand. As of this writing, nearby gold CFD’s this week reached a record high of $2,722.52. Nearby silver CFD’s hit a 12-year high of $35.38 oddly back on October 1st 2012. You’ll get those early chart clues regarding potential price trend changes from me in my daily reports. Here:https://www.youtube.com/channel/UCeUZ1J-fl-JhiyGn-dVoiOw
Importantly, take a look at a longer-term gold chart that shows both the nominal price of gold and the current inflation-adjusted price over the last 50 years. The chart below comes from the Reuters news agency. In January of 1980, nearby gold futures hit a then-record high of $875.00 an ounce. Adjusted in inflation terms, the price in 1980 would be just below $2,500.00. The present price of gold, in inflation-adjusted terms, would be just below $2,000.00. Remember that market price history tends to repeat itself. Thus, the gold market bulls can certainly argue that the inflation-adjusted chart from Reuters suggests there’s at least $500 more in price appreciation for the gold market before it either pauses on a longer-term basis, before continuing to trend up, or it reverses the uptrend.?
Sharpening your trading skills:
The most important requirement for a trader’s success is that he trades in a way that is consistent with his own personality and belief system. “’To thine own self be true,’ as Shakespeare said.” You always needed simplicity, structure, and a clear vision of the path ahead in order to trade successfully. Your trading method has to reflect those values.
The trader needs to know why he’s getting into a trade, where he’ll get out if the market moves against him, and how he’ll exit with a profit if the market trends in his favor. You have to be careful not to over-complicate your trading method, not to make up new rules as you go along, and not to lose sight of your goals.?
Regarding entering a market, the risk and profit objective in a trade, some of the best indicators are called the DMI and ADX.?
You first determine the trend. You can use exponential moving averages (EMA) of highs and lows with a faster EMA of closes. The trader confirms that trend indicator with the signal line of a sensitive MACD (Moving Average
Convergence/Divergence). Second, check to see if the trend has good momentum and consistent directional movement. The trader can use an RSI (Relative Strength Index) to evaluate the momentum and the DMI spread to evaluate the market’s current ‘trendiness.” (The DMI spread is the difference between the + Directional Index and the Average Directional Index ADX.)?
If the trader determines the market is in a good uptrend, he next looks for retracement. At least three of these four conditions must be met: Prices decline into a moving-average channel, the MACD line crosses below the signal line, the RSI declines below its midpoint, and the countertrend decline is at least a 38.2% but not more than a 61.8% retracement of the previous trend wave.?
After the trader identifies a retracement: In an uptrend with RSI declining at yesterday’s close, you buy at a one-third retracement of the countertrend decline. In other words, one-third of the way back up. If RSI was rising at yesterday’s close, you buy at one-third of the way back up or at a return to yesterday’s high--whichever is lower.?
Once in the market and long, the trader then sets a protective stop at the low of the countertrend decline “or at one 10-day average true range below your entry point whichever is lower.?
If the trade is going your way, trail a stop at the highest high since entry minus one tick more than the size of the previous corrective wave.?
To review, the trader looks for an impulse wave and a corrective wave. He buys if the market starts back up, and he sets a “reasonable” protective stop. Then, he trails a stop the highest high since entry minus one tick more than the number of ticks in the corrective wave.?
The trader does not always continue to trail a stop until the market stops him out. There’s a time to trail a loose stop and a time to trail a tight stop. On the day that the market reaches your profit target, raise the trailing stop to the intraday low.?
On your profit target, the trader relies on a “measured-move objective”. It’s a little complicated to explain, but here goes: After your entry into a long position, look back on the chart and find the most recent pivot point low (a low with higher lows to its left and right on the chart) that would make the recent countertrend decline a 38.2% to a 68.1% retracement of the uptrend. Then subtract that pivot-point low from the high of the uptrend and add the difference to the low of the countertrend decline. That’s the measure-move objective.?
Giovanni Betancourt
Premium Client Manager,
Telephone: +1 (345) 769-1640
WhatsApp +35794039445?