Gold Futures is an up channel.
Today’s date is May 11, 2021. Happy Tuesday everybody. Behind us is the gold futures on a one hour timeframe. We are inside of an up channel. Now, when you trade a full contract in this one, every tick is valued at $10. And if you trade a micro contract, every tick is valued at $1. So this is a pretty decent up channel. It’s newly established. You have one, two, three touches of support on the bottom, one, two, three, four, five, six touches of resistance at the top. It does appear that when the market comes near the top of resistance, it tends to retest it several times, which means there’s a lot of buying pressure. It typically means a lot of buying pressure.
When the market barely touches the low support, and then u-turns, `u-turns, u-turns relatively quickly it means people could be highly interested in buying gold, which makes a lot of sense considering what’s going on in the marketplace with threats of inflation, with uncertainty of what’s going on with the stock market, printing of additional money, losing a buying power and cash, people are looking to store buying power and a way to do that is what’s called the gold standard. It is my personal belief that we’re going to have another 6,000 tick rally on gold futures over the next year to year and a half, which would be worth over 60,000 US dollars. Now again, that’s where the full contract, and that’s not an overnight move. That is a move that’s going to have several waves, several setups that has to be monitored throughout this next year to year and a half.
Comes down to Patterns
Currently, we are inside of an up channel and we’re at the top of the channel. At the end of the day it comes down to patterns. What pattern do you like to trade? For me, I find great comfort in trading areas of known levels of u-turn. So whenever I see the market inside of an up channel and we’re making higher highs and higher lows, higher highs and higher lows with structure, I really enjoy trading only at the bottom of supports. I like to say, “Okay, buy support profit resistance, buy support profit resistance, by support profit resistance.” When we get to this level I don’t like to trade against the channel. when the channel’s on the way up I do not like to sell against it because you never really know the next move.
The next move could be back down and then you buy on the way back up. That would be the ideal scenario. The move could also be a breakout, and then a retest, and then a rally as well. So I don’t know if the next buying opportunity will be the bottom of support, which will make the most amount of sense, or will be the bottom of support, but above the channel. So because of that, I do not like trading against the trend. So this week’s idea is knowing where to take profits and where to get in. When you look at this channel on the one hour timeframe, buying the bottom level and taking profit at the top level is realistically the ideal scenario. Buy low profit high, buy low profit high, buy low profit high. Right now gold futures is an area where profits should be taken not where entry should be given.