Trade Strategy 07.21.15


Gold and other precious metals continued to trade close to their lowest level in five years today amid rising expectations for a U.S. interest rate increase that has boosted the dollar. The strong currency makes raw materials less affordable to overseas investors, while higher interest rates tend to draw money into yield-bearing assets and away from commodities. Bullion for immediate delivery is now down 0.1% at $1105.40, but dipped below the psychological mark of $1,100 an ounce in early Asia hours. 


Despite some signs of price action getting tired, trend remains solidly in place as naysayers keep looking for shorting opportunities. It would take a decisive and sustained violation of 2112 level to change the underlying uptrend dynamics. Though volumes and range are both narrowing, that is not enough evidence of an impending reversal and sell down in prices. Mid-Summer slowdown is always expected as money managers and traders take vacation time with families…This only adds to the contraction in range and volume.

Today is Cycle Day 1 (CD1)…Normally we would be expecting some sort of decline beginning for the new cycle…Bullish trend strength and direction is squarely dominant, so any decline may be relatively shallow…Key Support Zone is between 2118.25 – 2116.25 Three Day Central Pivot Zone.

Odds of decline > 10 = 72%; Odds of Decline > 20 = 41%; Average Range = 18.75; max average range = 22.00; Possible HOD = 2126.00; Possible LOD = 2106.75 average decline on CD1.

***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.

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Today’s Hypotheses: September (U) Contract

*****The levels outlined below are more general framework within a larger range…They are to be used are reference prices from which to consider trade opportunities, not hard trade levels

Scenario 1: Current bullish trend remains intact and pullbacks are anticipated to be relatively shallow…IF price holds above 2120 handle, expectation will be for retest of PH (2126.25)…IF cleared and converted initial extension targets 2126.75 – 2127.75 STATX Zone. Above this zone is very little resistance and upside measured move targets 2134.75.

Scenario 2: Price will need to violate 2120 handle for first sign of weakness…Conversion of this level targets 2118.25 – 2116.25 3D CPZ Key Support Zone. Violation of the zone targets 2112.00 – 2110.00.

Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.

Stay Focused…Non-Biased…Disciplined  ALWAYS USE STOPS!

Good Trading…David

“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee

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