Duxon's Journal on Trading Metals

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COMPARING GOLD TO SILVER

My initial impression is that 16-hour measures are not going to serve silver in the same manner they did gold, and probably won't even come into play at all. Also, instead of the 60-minute price range envelope at 0.73% deviation designating the maximum degree to which price is likely to traverse on any given day, silver handles this job via the 30-minute price range envelope at 1% deviation.

Silver's short-term intraday trend is tracked pretty well by the 8½- to 9-minute price flow channel (on intermediate charts) at 0.20% deviation. However, if price happens to pop out of this boundary—hold on to your horses! You could be seeing silver decide it's going to take off on a flight (or plunge into a deep dive) that nothing is going to be able to hold back...30-minute price range be damned!

As previously implied, gold's path throughout the day is tracked rather nicely by the 60-minute price flow channel, with fluctuations within this measure traced by the 10-minute moving average envelope. But unfortunately, there is no equal when it comes to silver. The closest approximation is the 30-minute measure at 0.33% deviation (roughly three times the width of gold's "core" percentagewise).

However, the 30-minute envelope is not always stable. So, whenever this is the case, it is necessary to note the general direction in which the channel is headed overall rather than the direction in which it is angled at that exact moment.

As for the fluctuations between the measure's upper and lower bands, the 6-minute channel at 0.02% deviation outlines the immediate price flow/trend, and leads—or is confirmed by—the 8½-minute baseline. (It also leads the 17-minute baseline, but this is a lagging measure.)

But unlike gold's price action, the price of silver rarely comes into contact with the 30-minute boundaries, resulting in the need to use the 17-minute and/or 8½-minute moving average envelope(s), both at 0.20% deviation, as alternatives for judging when and where to enter and exit positions.

The last two observations I want to mention here are that...

1. It usually makes sense to be long silver when the 17-minute baseline is above the 30-minute baseline; or short when the opposite is true, and
2. When the lower panel histograms corresponding to the slopes of the two-hour price flow AND the 30-minute price flow are BOTH above or below their respective (and matching) thresholds, there is a VERY high probability that traders will make a profit by entering the market SO LONG AS THE 8½- AND 17-MINUTE CHANNELS CONTINUE TO MAKE PROGRESS IN THE APPROPRIATE DIRECTION.

 

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NATURAL GAS

All three charts would recommend using the two-hour price flow to convey the general overall direction of the intraday price flow (even though it does suffer from a touch of lag) given that the hourly trend is a tad bit unstable, which can at times deceive an observer as to where price is ultimately or eventually going.

To track the immediate (as opposed to general) overall intraday price flow, the 20-minute price range envelope at 0.87% deviation captures most of price action most of the time—though candlesticks can occasional reach as far as 1.70% when natural gas begins trending.

You will typically want to be long when the ten-minute simple moving average is above the 20-minute baseline, and vice versa (short) when the opposite is true.

The 15-minute temporal support/resistance channel can be looked to for recognizing possible launch sites, but so can one-minute pullbacks behind the three-minute measure.

Once price action clears the 40-minute channel at 0.60% deviation longer than 30 (to 45) minutes, you can pretty much conclude that natural gas is going on an extended run.

 

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At 10:00 AM PST Nadex was no longer offering two-hour binary option GOLD contracts. So, I need to check tomorrow to see if they're still available at nine (if I remember).

(I'll be surprised if they're not.)

Two-hour contracts for CRUDE OIL and NATURAL GAS were no longer available at 11 AM PST.

Also, it appears there are weekly contracts for CRUDE OIL, GOLD and NATURAL GAS, but not so for SILVER.

 

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Comparing the price action of gold, silver, oil and natural gas to that of foreign currency pairs, stocks and the major US indices, I find the former to be much more orderly than the latter..

In the process, I noticed it appears that if the lower band of silver's 15-minute price range envelope at 0.20% deviation is above the lower band of it's 60-minute price flow channel at 0.10% deviation, a long position is almost guaranteed to be a moneymaker.

Conversely, if the upper band of silver's 15-minute price range envelope at 0.20% deviation is below the upper band of it's 60-minute price flow channel at 0.10% deviation, a short position is almost guaranteed to enjoy a profitable outcome.

With gold, look for the 45-minute baseline to be "riding" the upper or lower band of a sloping 60-minute price flow channel at 0.10% deviation.

Natural gas essentially has you simply going with the flow of the 21-minute price range envelope at 0.60% deviation (with the 17-minute channel at 0.90% deviation tracking matters with a greater degree of precision).

However, a second look suggests oil has more in common with Forex and equities than I originally indicated. Like the latter, oil does not really evidence a single measure or two that can succinctly define the dominant trajectory of price all on their own..

I would describe these assets as doing a lot of "scrabbling around," which makes it difficult to pin them down with any kind of elementary strategy.

 

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However, a second look suggests oil has more in common with Forex and equities than I originally indicated. Like the latter, oil does not really evidence a single measure or two that can succinctly define the dominant trajectory of price all on their own.

MORE THOUGHTS ABOUT OIL...

In reference to trading silver using a one-minute chart, you wrote in your personal notes that "when calm, price action is essentially captured by the six-minute envelope at 0.04% deviation (and the 8½-minute channel at 0.10% deviation). But, during periods of spasmatic seizures, it probably makes the most sense to enter positions above or below the 17-minute boundaries at 0.20% deviation, or even the 30-minute boundaries at 0.33% deviation."

However, in taking a third look at oil charts, which are kind of nothing but spasms and seizures (though not really) I think your best option might be to do something similar. More specifically, unlike the other commodities, where intraday price action is mainly swept along by 15- to 60-minute currents, oil appears to be caught up mainly by a three-hour flow. (So then, there IS a single measure that more-or-less defines oil's dominant trajectory after all.) I therefore think your best bet would be to set a minimum degree of pullback that you would find acceptable for executing trades, and then enter positions when there is a consensus of the one-, two and three-hour price flows in one direction, and price pulls back to meet your minimum threshold in the opposite direction—especially if it comes close to or makes contact with the contrarian side of the three-hour price range envelope at 0.70% deviation.

 

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I would say that with natural gas, one must day trade using one-minute charts due to the "spasmatic-seizures" nature of price action. No doubt, I'm probably going to make the same observation with respect to one or two other commodities.

 

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At 10:00 AM PST Nadex was no longer offering two-hour binary option GOLD contracts. So, I need to check tomorrow to see if they're still available at nine (if I remember).

FRIDAY | MARCH 15, 2024 | 10:40 AM PST
But of course, I didn't remember.

 

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More specifically, unlike the other commodities, where intraday price action is mainly swept along by 15- to 60-minute currents, oil appears to be caught up mainly by a three-hour flow.

EVEN MORE THOUGHTS ABOUT OIL...

In taking another close look at the corresponding chart(s), I would say that if the slope of oil's two-hour price flow (as represented by the lower-panel histogram) is greater than 0.677 or less than -0.677, and there is a significant amount of space between the contrarian bands of the two- and three-hour price range envelopes at 0.70% deviation, the odds are better than even that oil is in the midst of an unstoppable trend.

You also want to keep an eye on the 40-minute price price range envelope at 0.65% deviation. However, because oil's price action evidences such an excessive, inordinate amount of fluctuation, even this measure is typically unstable. Consequently, more important than looking at the angle in which it is pointed at any given moment is determining the gist of the direction of its overall progress/trajectory.

(Faster maneuvers are suggested by the positional relationship between the 3-, 10- and 16-minute moving averages.)

 

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Gold's path throughout the day is tracked rather nicely by the 60-minute price flow channel, with fluctuations within this measure traced by the 10-minute moving average envelope.

CLARIFYING THE CHAOTIC PRICE ACTION OF GOLD

Though the 60-minute envelope at 0.73% to 75% deviation does indeed designate the maximum degree to which price is likely to traverse on any given day, this only comes into play when the market becomes extremely volatile (i.e., during the release of economic data). More typical spikes and plunges are defined by the 17-minute envelope at 0.30% deviation.

And while the 60-minute measure works for the extremes, tracking the ongoing, more usual or "normal" intermediate flow of price from an intraday perspective is a role that is perhaps better filled by the 40-minute envelope at 0.10% deviation. The immediate price flow, or fluctuations within the borders of the 40-minute boundary, are shadowed by the 10-minute envelope at 0.02% deviation (as stated in Post #11) and confirmed by the 17-minute baseline.

In Post #15 I wrote that it makes sense to "look for the 45-minute baseline to be 'riding' the upper or lower band of a sloping 60-minute price flow channel at 0.10% deviation." However, I think I got my signals crossed there. The two measures I actually had in mind were the 2⅙-hour baseline and the three-hour price flow channel.

Moreover, you can substitute the above set of circumstances with simply regarding the overall intraday bias or sentiment—the macro price flow within a day trading context—as bullish when price action is taking place above the 2⅙-hour price flow channel at 0.03% deviation, and bearish when price action is taking place below it...

Aggressive traders might opt to enter positions as soon as 10-minute price action pops out above or below the 2⅙-hour channel rather than wait until the yellow measure reverses direction; and if a trader has not taken profit before candlesticks are drawn back to this "magnet," s/he should certainly do so as soon as that happens.

 

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FINAL SUMMARY...

Whereas the 2⅙-hour channel at 0.03% deviation is the determinant measure for gold, the equivalent measure for natural gas is the 20-minute envelope at 0.07% deviation.

The key with silver is the relationship of 23-minute price action to 60-minute price action, AND a minimum amount of slope in the two-hour baseline.

With crude oil, it's the consensus opinion of the slopes of the two-, three- and four-hour baselines, and just as importantly, the location of price within the three-hour price range envelope at 0.70% deviation.

And finally, with Forex, the 34-minute price flow is king. Nonetheless, it must be considered in light of [1] the degree of slope displayed by the two- and four-hour price flow channels (if any); [2] the position of price within the four-hour price range envelope at 0.25% deviation; and [3] the slopes of the six- and eight-hour price flows.