The gold market is one of my favorite futures contracts for both shorter term and longer term trading. It offers ranges, volatility, fear, greed, news and all the spices that go into a good trading salad!
Now that the fear of a surprise in the French election is behind us, what I see is a market heading lower and the one thing that can help it move the other way is geo political events (Perhaps president Trump?) because from a technical perspective the market is moving lower on the daily and the weekly time frames as one can see in the charts below.
Looking at the daily chart below I see a few things:
- Until proven otherwsie the 1293 level will function as market top.
- Markewt is moving down in a strong 3rd wave, which means we will have a bounce sooner than later, the question is how much of a bounce and wil the downtrend resume?
- 1200 is a psychological level followed by support at 1186. Resistance above at 1256 should contain rallies for now.
I now trun and look at the longer time frame, the weekly chart and will outline a few observations. Your job, the reader, is to look for confluences between the two time frames and allign your strategy accordingly.
- Market seems to be heading towards the 1197 level
- This week is the first “red weekly bar” in few weeks
- A break of 1197 can trigger a test of lows made in December 2016 post the elections
Depending on your style of trade, your risk capital, experience and other factors, there are many different strategies one can use: trading outright futures, buying options, selling options, options spreads, futures and options combo and much more!
My preferred method to attack gold is by using
options and options spreads. I feel it offers a bit more “staying power” and room for error in case your timing is not perfect ( who’s timing is perfect??)
The main thing is you need to have a view of where the market may be going to or a view of where you think the market will NOT be going. After that, create a trading plan (one that will include action plan for you if you are wrong as well as money management rules) and then trade your plan.
If you are not familiar with the risks associated with futures trading and/or options on futures, I recommend you
visit our broker assist services and get help creating a trading plan.
Disclaimer - Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.