One step up
Two weeks ago we advised not to be tempted to go long with $15 as a large number support. That was good advise, since we now broke that support, without much advancements in between. Last week we warned about the “megaphone formation” and again spared those, who heed our advice, disappointing losses. Cash is king since it allows for action when the time is right. While time passed, the larger time frame picture changed. “One step up” in time frame allows for participation, without the risk of the “noise” that lower time frame participants often battle with.
Megaphone formation starting two weeks ago:
More of the same after another week of trading:
During the up creep that started on April 29th and went until April 9th, daily players were tempted again and again to take a short position. For those who followed their intuition of these feelings, a painful route of stops taken out shortly thereafter was the “reward”. Long players had no different experience.
When in doubt, we as humans, find resource in our intuitions. The market, being counter intuitive in nature, rewards such behavior with constant losses. This is the principle reason why market participants do not create random results. Incorrectly trained traders and investors have very consistent loosing streaks due to this phenomenon!
As the underlying emotions, which create this doubt, get magnified the closer the price movement is coming (lower time frames). Therefore, the remedy is simply “One step up”.
While perception battles about the long and the short side on daily time frames caused recently much “noise”, the weekly chart shows now clear opportunity within reach.
Zone A price penetration between $14.80 and $14.64 would allow for a small weekly long position. Entries in that region show great risk reward potential towards recent monthly highs ($16.18).
Zone B price penetration ($14.64 to $14.46) would allow a more aggressive position sizing, as it is providing good support and excellent reward probabilities.
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