Gold: Take Profits at $1330, Beware the London Open

Gold

Update 12:45pm - if we do not hold the $1312- 1310 area in spot there is a lot of trouble ahead.

The 60 minute is looking at an inflection point in the area

Breaking $1310 on the 60 minute chart would likely increase BBands and imply accelerated downside movement. Inflection to say the least

Meanwhile the daily shows the same area as an outright negation of today's momentum higher.

The Upper BBand comes in near $1312 currently. A settlement inside that adds fuel to the 60 minute chart above

Expect more profit taking if we get below this area. Pray some buyers have not gone to the market and are waiting for this dip to buy in. If stops exist, expect Commercials to gun for them here.

Take Profits Now

Big players like Soros and Druckenmiller use liquidity events to get out of massive positions all the time. This is another example of where these types may sell into strength. That does not mean the market will not continue higher afterwards. it does mean profit protection is mandated when gorillas like these are entering a room. If we do not close weaker today, beware the London Open for a large profit booking as the past has shown us.

Yesterday, via Moor Analytics we gave you the road map ahead. Admittedly we did not think it would happen so quickly:

August 21st : We wanted a bull flag

We wanted a bull flag to form starting with a selloff early last week, as opposed to the one at week's end, and said as much on Aug 21st;

Ideally, over the next 3-5 days: we wanted to see Gold fill the Comex gap underneath, and in the process shaking out some weak longs and luring some shorts to pile in. First touching the $1285 area, close with a positive settlement on a lower day. Then we could see a nice orderly rally out of a bull flag. But so far that is not the case. Instead we have more buying at the top end of a range that has earmarkings of Friday's behavior.

Aug 28th: We got the Bull Flag

Our time frame was good. Our order of events was not. The rally / dump 2 Fridays ago did spook us, but last Friday's sell-off and rally undid that. The Comex gap got filled underneath as we wanted, and the market closed positive on the 25th, leaving a tail of sellers trapped below. Happy to be wrong timing wise here about the momo money bailing.

Michael Moor's Next Steps:

From yesterday's post

Paraphrased with our comments in italics

Areas of possible exhaustion for this move up come in at 13143-237 and 13466-556 - We have moved through the first area of congestion overnight
Take profits in the $1330- $1332 first time up, reverse on a break above with a $1336 target - Some profits should be taken on speculative portfolios long from the $1285 area or lower. We do not think trailing stops will serve specs well here.
Buy to cover shorts in the $1321 area first time down. - if you are getting short in the $1330 area with a $1332 stop, we like this advice
There are multiple resistance numbers that may be broken early, only to serve as accelerators of profit taking on a repiercing lower - This may be a strong hands to weak hands day

For additional information contact: Moor Analytics

Email: Michael Moor Phone: 646-708-4612

Our 2 Cents

Comex Futures now have a Gap between $1317.80 and $1318.90. To those who ignore gaps as Gold is a globally continuous market, we get it. But to those who trade in one time zone, they remain relevant when applied consistently. We'd be hesitant to buy that gap if tested because of our own style.

Bollinger Bands show us that if one were playing the momentum game it is prudent to remain long until a settlement occurs within the outer band. This comes in currently at $1321 now, and is consistent with Moor's levels. Any breaking of that level, especially late in the day does not give us a good risk reward in which to buy. We'd rather short in the gap with a stop-loss and reversal set at $1321 for a day trade.

Today:

Take some profits near $1330-1332
Take more profits if Moor's area of $1346 is reached
Leave a tail in the form of long calls or a small position that wont kill you on a $20 move lower overnight.
Buy $1321 area for a bounce back to $1328- $1330. Risk a $1317 print
Short here at $1325 with a buy stop on new highs with a target of $1301 ( do not take home if out of the money on close)