Gold as of this writing is powering through the potential exhaustion area between $1346 and $1355 (basis Dec futures) where we saw some sellers taking profits. But it hasn't come out the other side yet. When a market attracts enough interest for whatever reason, it respects numbers much more quickly than usual. Hence why the 4 hour volatility cycle worked so well today. Who is the culprit? Who knows.
But algos are the new hot money, and there are more of them piling in daily. Remember when Oil had that relentless run a few years back? That was in part algo based. And right now this is starting to feel like algos front running themselves. You know, predatory algorithms front running genuine order flow like bullion dealers used to. The legalized manipulation embedded in market structure that allows marketmaker firms to have faster access than their clients. As opposed to the thin market algos that gun for stops. That makes it no less real. Especially if it forces normally strong shorts to cover. Anyway, the market is moving.
It's All About Rhythm Now
We'd hope that the market moves sideways for the evening to give volatility a chance to properly inhale. Otherwise, if we do power through the upper end of this area and breach $1355 too soon on a settlement basis, we could be setting ourselves up for a corrective wash on a retest of the same zone going down. Gold has a nice rhythm to it now, and we'd like ot see it not get overextended, especially when so much of this flow may not be physically related.
Keep your powder dry if you are trading. Buy dips, but do not forget to sell rallies. We're just long Silver on a monthly signal.
Spot Gold 4 Hour Chart Now -
Dec Gold chart here
Here is what we had to say before today's open on the matter
Traders loading their guns for the US open should take note of this chart. it is currently the best indicator of volatility's cyclical nature in Gold and is coiling again for an expansion. We'd use this as a natural trade entry point for today. Right here it is telling us a close on either side of $1340 and $1333 in 2:45 minutes will give a signal to go with the flow and a nice stop out level on the other side.
As we said, Gold is very trade-able now and respects numbers quite efficiently. This may be the last good risk / reward for a while however and we are watching it for entry today. All the pieces are in place. Given the event list today, "first way - wrong way" possibilities apply and we are ready for that.
This 4 hour spot chart is what matters to us today as the market bumps up again to a possible area of exhaustion discussed before here
Read more by Soren K.Group
