Any Gold Chartists/Technicians

[ess1096]

When determining support and resistance on a Comex Gold daily or weekly chart, is the professional trader looking at the specific month's contract or the continuous contract?

I have looked simultaneously at GCM08, GCQ08, @GC & @GC.P with support/resistance drawn in relatively the same place (a specific day's trading) and have come to the conclusion that an argument can be made for or against each theory.

Obviously for historic S&R a continuous contract is needed since liquidity becomes an issue when looking back in time on the current month's contract. However, looking at the 2006 highs on @GC shows a much different picture than @GC.P (pit only). Gold actually traded up to and above $800 in 2006 but you wouldn't know that from looking at the continuous contract @GC.

Any ideas?

 

[Shagi]

eees - thats a common problem when using continous charts be it esignal or tradestation. Sometimes the data is ouright misleading especially if the rollover is done late when liquidity has dried up in the expiry month. Esignal is particularly bad if using deafult continous chart settings. On some contracts the charting continues until last trading day when volume and open interest is dead.

So I tend to go with the chart of the specific trading month and compare that with the continous month and the previous month.


I then pick that which ever option still trading that has the highest trading volume and open interest as the true picture of what Im looking at.

 

[SethArb]

one can also use the cash or spot market for a reference point

 

[Shagi]

Thats why backtesting with continous charts is sometimes a bit foolish and as the results are nowhere near reality.

Using cash prices as Seth says is a good idea like in forex.

 

[ess1096]

Thanks.
Is there a symbol for the cash/spot price that will bring up a chart in Tradestation?

 

[Shagi]

thats a gold chart indicating falling prices - generally most metals are heading southward bound in the near term. enjoy the short side but hell difficult to trade and hold long with sharp rallies shaking out week hands

 

[ess1096]

Quote from Shagi:

enjoy the short side but hell difficult to trade and hold long with sharp rallies shaking out week hands

I've been trading the short side of gold and silver since March and I agree that it's been no straight line down.

 

[edpolton]

When trading anything longer than a scalp, I use spot charts for S/R and trendlines. I have found continuos charts to be practically useless and the price decay on GC makes it difficult for any S/R more than a few days old.

I have also found that the futures have a tendency to over or undershoot the S/R, giving false signals.

When day trading, I keep a spot chart on one monitor and a GC chart on the other. I get my signals from the spot chart and my triggers from the GC chart.

Anyway, that is what works for me.