I am taking on the Gold this week for analysis. Never looked at it earlier, so thought why not give it a try and see how I interpret the charts. As usual I begin with the weekly chart and move to the daily. So here it goes;
The Weekly Picture:
Gold is very delicately placed for a good breakout. A good push and it is sure to break the clusters of resistances it’s sitting at. Speaking of resistances; we have the 20 (810) and the 50 (825) EMA’s (Green and Blue lines respectively). It’s just managed to close a wee above the 38.2% retracemnt taken from the March highs October lows. The RSI below has broken its short term trend line, the MACD lines are willing to give a buy signal will Gold play Ball? Weekly range for now stands at 850 on the top and 750 on the lower side. The Bias? Bullish!
The Daily Picture:
If it was 38.2% retracement on the weekly chart, in the daily Gold is facing resistance at 61.8% of the swing marked on the chart. Plus there is the 200 EMA it’s trying fend off. A nice converging of the 20 and the 50 EMA’s are there to cushion the fall. The flip side is that the MACD histogram is showing bearish divergence. The RSI is at 60 from where it has been reversing lately. Let us see how it unfolds in the coming week. My amateurish eyes see a CNH pattern (shaded area in yellow), and with ADX below 20, I am hoping that any break above the current resistance will be followed by ADX also showing strength thereby confirming a strong uptrend.
The Potpourri:
Well if I am writing about Gold I might as well write about Silver and Dollar too. The chart above is nothing but a collage of things we are discussing(actually its one of my templates I have saved). Like Gold, Silver is also critically poised for a breakout. As for the Dollar and Gold, it’s a proven fact that they move in opposite direction. A quick check of the Dollar chart and you will see if it is showing bearish bias. So time to sell the Dollar and buy Gold or Silver? Well so much for my amateur analysis, all comments and suggestions are welcome so that I can improve upon my analysis.
"Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude." Thomas Jefferson
2 comments:
Manoj,
what is CNH pattern. How do you confirm and trade divergence, yeh you mentioned price-action but exactly how ? any chart or live example will be of great help!
Further for trading , you manually analyse your selected group of charts and scan trade -setups or follow any trading system ?
Manoj... it is practically not feasible to manually scan vast number of charts also it is time consuming to analyze even selected number of charts so many traders prefer trading system. Further trading system are objective whereas our analysis is subjective...pls do comment on this vital point and let us know whether you use any trading system or scanners to shortlist charts.
One more query manoj....manoj lets say (suppose)today you have analysed nifty and you have a plan to go long on nifty future tommorw ( monday) but nifty opens 100 pts up.....without giving you an entry at yoiur desired level....what will be your stand ...what do you do in such situation...? pls comment....
Great work ! keep posting.....
ANonymous Hi..I would have preferred if you would have left a name. CNH is cup and handle pattern.
As for divergences and how to play them please do read my earlier post on Divergence. Price action confirms divergence play when it breaks out of an important trendline, moving average, a pivot or a pattern.
There are plenty of softwares which are available which can scan stocks as per the parameters you feed them. I personally like to scan visually one i have results of this scan in hand. I am more of a discretionary trader and I like to reserve the right to pik and choose the charts I like to trade. I mean the final analysis has to be done yourself!
As regards to gap ups..well you can go contra when playing them refer to my earlier post on gaps.
As regards to taking my positional trade if I have gap up next day, let me give you an example...supposedly my buy trigger is at 2800 with the tgt of 2950. Therefore my reward is 150 points and my stop is 50 points at 2750(1:3 R/R).Next day presumably the market gaps up and open at 2875...No i want open my longs in such a situation, because the R/R is not in my favor.In fact if I see the price dipping during the day and coming to a buy I would enter. If it doesnt, then I am not going to chase it coz with R/R skewed against me I am already treading a dangerous path! There are times when you need to let the best of trades go coz they dont measure up to your money management.
Well these are just my personal thoughts, and I have much more to go!!!
Hope this suffices you.
Regards
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