Gold, Silver, and Indexes Using Price Action

[Gringo]

GLD is holding fine for now. There wasn't a major selloff and now a demand line is also visible. Lets see if demand comes in to lift the price. I have drawn a range where there's a potential for some resistance to show up. Resistance is not a certainty, and it's the action of price itself that will tell us whether there is resistance worth paying attention to, or it's just a colourful line across our chart.

It's possible price may decide to take another leg down and all we'll do in that case is exit and wait for another signal for entry. This is the essence of trading. We don't really know what's in store for our future, and can only follow the lead of price. The main thing is to keep losses in check and maximize our profits.

Gringo

 

[Gringo]

QQQ has made a new high. We also have a new demand line in place. So what's the verdict? The simple verdict is that price is moving up. It hasn't given a reason to panic and exit longs. There is of course need for staying alert as always but is the nature of the business. Until the price breaks the new demand line we can relax a bit and let the magic take its course.

The indexes have been moving up, so the stocks that are having trouble moving up at this time are either basing or laggards. These stocks generally have a higher probability of being prone to adverse conditions. So please pay attention to your portfolios and weed out the weaklings as warranted.

Perhaps I'll post something regarding some darling stocks just to have some fun.

Gringo

 

[Gringo]

Here's the same chart with hourly bar intervals. It shows the price movement is independent of how we choose to display it. In this case both the end of day trader and the one using hourly bar intervals both stay long. Of course the shorter bar interval trader gets to exit and enter earlier because of signal coming earlier.

Gringo

 

[deaddog]

Good stuff. Thank you

 

[Gringo]

Q's couldn't keep their new high and price has dropped below. This is not a full fledged sign of weakness but is a hint to stay cautious, as there wasn't enough strength to push price above. It may be temporary, but the market being closer to overbought territory (see weekly chart a few days back in this thread), it's prudent to be cautious. I would be cautious of initiating new longs in the stocks as well at this time.

We'll see if the sell signal comes later but the demand line is barely holding so we stay put. The aggressive kinds may attempt something crazy at this time on the short side. I am not that aggressive. Maybe it's this gentleness of mine that the women so adore.

Gringo

 

[deaddog]

So when would you consider a short?
If it trades below the last swing low of 81.55 or do you let it break the demand line and then fail to make a new high on a retracement?

 

[Gringo]

Quote from deaddog:

So when would you consider a short?
If it trades below the last swing low of 81.55 or do you let it break the demand line and then fail to make a new high on a retracement?

I would prefer to short after the new DL break and retracement. There are many ways to short and most of what you have written is valid as far as shorting is concerned. What one needs is an understanding of one's personality, risk tolerance, and testing to know which option is better.

Gringo

 

[tupapa]

Quote from Gringo:

Silver has dropped down quite strongly after a show of strength two days ago. ........

Gringo

Hello Gringo, long time no see. It is good to see you, and others from TL are still active.

Also thanks for this thread, I will be following it as I am now trading exclusively EOD, commodities and equities.

I was reading your analysis of that silver trade you took a few days ago, and I can identify with your frustration.

You say that perhaps you should´ve waited for silver to exit the channel, but I´d argue your entry was ideal, in this case price dropped for a re'test but price could´ve rallied and you are left without a trade.

I´d say its more a case of how you manage the trade once you are in it, and I agree with you that it is important to move down to a shorter interval, in my case I prefer the 60m.

Drawing a DL on the 60m chart is a way to assess weather price is actually doing what you expect it to do, which in this case was to rise.

I have to admit that this is still a struggle for me, since a part of me is so deluded and stubborn that refuses to accept the disconnection between what I believe will/should happen and what really is going on.

 

[Gringo]

Hello Tupapa,

It's good to hear from you as well comrade. There seems to have been a misunderstanding regarding SLV entry. I haven't initiated any shorts or longs in silver. It's gaps and price action was not giving me much comfort so I stayed away from it. At times the mind isn't properly perceiving what's going on and I just wanted a break from it until clarity returned. To have a higher probability trade on the long side I wanted to wait until price broke out of the trend channel and as far as I can remember that is what I wrote. On shorter bar intervals I am sure there are options to go long or short more often even within the trend channel.

You'll notice I started commenting on gold instead. Gold seems to have a better price flow to it, although is not as fast a mover as silver. Both move very similarly with occasional disconnect.

When I comment here I focus more on explaining the thinking behind price moves instead on exact entry or exit. The entry and exit are so influenced by risk tolerances that my insisting on that aspect of trading might discourage someone unjustifiably to disregard other viable options. Yes, at times I am guilty of perhaps not containing myself when an entry that fits my plan shows up.

Gringo

 

[Gringo]

We have a break in demand line around potential resistance. The price drop hasn't been server so far. What's important to note is the difficulty with which price was rising the past few days. The volume has been muted recently, indicating a lack of intense participation on part of both the demand and the supply.

Gringo