As mentioned in prior Focus On Gold updates in the past few days, the juxtaposition of currency tests in various world currencies is adding a certain amount of drama to Gold watchers. After a three day bounce, Gold contract sold off Thursday, bringing a number of new short positions into the market. They will be looking for follow through today.
A quick look at a couple of currencies shows us that tests of bottoms are in play today in GBP:
And we can certainly imagine a test playing out here or shortly in EURUSD:
And in the Dollar Index itself, a test of top, failure of which would be heartening to the Gold group:
Stocks like PDG and ABX (these are in Canadian dollars, just as examples) and many others generally followed Gold down on Thursday:
PDG also happened to print an inside day on Thursday.
The bottom line: everyone wants to see if Gold continues down; or immediately reverses after a single down bar Thursday.
On the long side, swing trades can be attempted on a break of Thursday's high for stocks which share the configuration of Gold, PDG, ABX - the setup is buying the first "retracement" in an upswing. Occasionally when a market reverses, the first retracement will be a single down bar such as we see in these charts.
Swing traders will need to monitor these positions very carefully. Essentially you want the market to move immediately in your favour if stopped in. If we note any trigger intraday we'll place an update on the site today. Have a good Friday! /Mike
04.05.14 09:55 #