Hello traders,
I hope you’ve all had a good week!
It may be a new month, and a new year, but it many ways our focus has been on the same market as it was in December. In last Friday’s post I explained how our Checklists had helped us to identify an interesting setup in gold once again this month, without revealing the direction in our bias. As we are now are now at the half way point in January, I think it is time to reveal a bit more about the trade idea we generated using the process…
Here you can see the score for gold, which came in negative at -3. Liquidity and seasonality factors remain supportive, however, the other fundamentals are weighing on the precious metal. It is vital to consider a range of factors in your fundamental analysis of gold, as demonstrated here. Trading gold on the basis of action in the US dollar alone could land you in trouble, and is a common mistake amongst underprepared traders.
Here you can see the selloff in gold futures which followed the update of our Monthly Checklist Report on 4th January. This hourly chart shows how price was also at ‘overbought’ levels on the Relative Strength Index (RSI) indicator at the time, and primed the market for a $150 dollar drop in quick order. Trading Club members were alerted to this in my weekly video analysis which went through the setup in real-time.
So what’s the next move from here? Looking to the daily chart, you can see that gold has found support around 1835, which coincides with the 38.2% Fibonacci retracement level. Having successfully tested the 50% level in December, it may be that the initial move is over pending a further catalyst. Nonetheless, I certainly won’t be looking to buy gold here given the fundamentals being scored a -3 by our Checklist.
I will be keeping a close eye on the hourly chart for another potential entry short in the coming week, as well as the many other markets that our Checklist process has helped us to identify new setups in recently.
If you would like to learn more about our methods, and join me for more analysis in real-time, then check out our MDT course and Trading Club pages where you can preview everything that we cover. And in the meantime, why not head over to our YouTube Channel for our latest FREE videos which I will be bringing to you each week in 2021!
This week I looked at what the latest on Trump’s impeachment and Biden’s stimulus could mean for your portfolio, the battle between Facebook and TikTok in big tech, and how to invest in 2021. As we aren’t charging or receiving sponsorship to produce the content, it would be great if you could do your bit to support the channel by subscribing!
Watch this week’s video here: https://youtu.be/DuMbrDxQcwo
Have a great weekend,
James
Disclaimer: For educational purposes only. Even though we do our best to provide reliable data, you should not trade based on this information. For more information go to www.milliondollartraders.com
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