» A Question on Gold Blog for Trading Success: Ray Barros

BarroMetrics Views: A Question on Gold

In the Forum-Twitter posted I made a comment that I added to my Gold positions. I received a few e-mails asking on what basis I did this.

Here you are.

I viewed the rejection high of Jan 11 and rejection low of Jan 8 as probably forming a 1-day sideways pattern. Figure 1 shows the daily chart I posted on the Forum.

Note that the data is basis the CSI Perpetual Series. This is a synthetic contract I use for identifying trends and zones. You cannot trade it. I execute on the nearest futures month and calculate appropriate levels by working out the difference between the series and nearest futures month on a daily basis.

When I took my trade at 1153.7 (basis April), I took a half-size position on the basis that I needed acceptance above 50% of the down move (Figure 1) to confirm that Gold was on the way to the Primary Sell zone. Until that happened, even if the correction was over, there was a medium probability that we’d see a complex 1-day correction.

Figure 2 shows the subsequent sell-off of the 1166.60 high (basis CSI Perpetual)

When on Jan 13, the market tested the Primary Buy Zone and bounced, I assessed that the low has been seen and was willing to add to my longs. (Figure 3).

PS: Silly me I failed to press the ‘Publish Key’ yesterday. So I’ll add this addendum.

GC rallied to the bottom of the Value Area (67% to 62% retracement, 1136 [Figure 4]) and dropped. It took out the prior low and the rallied setting a classic negative development buy (Figure 4). This pattern suggests that we will see 1163 (Basis April) breached.

The benchmarks for this upward move are (Figure 4):

Acceptance above 50% of the move bounded by 1163 to 1119.5 (1141.2). Figure 4 shows we have seen this.
Acceptance above 1148.50. That should lead to
Acceptance above 1153.9 to 1155. That should lead to a breach of 1163.0