The gold futures were one of many markets with a breakout setup for Friday. This setup helped us anticipate and trade today’s big rally.
In last night’s edition of Swing Trader’s Insight I labeled gold as having a breakout setup for Friday, given the range contraction (Thursday’s range was 50% smaller than Wednesday) and doji bar on Thursday. Of the 23 markets I follow for STI, there were a number of markets with breakout setups- the Yen, gold, silver, coffee, crude oil and soymeal. Sessions that have a number of breakout setups in correlated (at least semi correlated) markets tend to see a number of markets moving in the same direction.
For gold, the initial price to watch for an upside breakout was the Thursday high of 1281.80. This price was exceeded last night; this was the first long entry signal if you wanted to trade it overnight. I normally limit my trading to US trading hours so I’m rarely entering trades before 7 AM CT.
I get into the office just after 7 and start looking at the overnight action to formulate a game plan for the session, which I write up in the STI morning watch list. This morning my comment for gold was: “It’s a TTT Sell day with a breakout setup- look to be long above 1281.80 with the 1284 level as a pivot point.” The 1281.80 level was the primary upside breakout level so as long as the market was above that level we could look to go long. I suggested watching 1284 on the upside because it had been an overnight high level, regaining it would be a sign of resumption of upside momentum.
Around 7:45 there was one last successful test of the Thursday high, followed by a rally through 1284 about 10 minutes later. Either of these could have been used for a long entry. The week’s high of 1290.00 was taken out around 11 AM, leading to another $7.50 rally.
Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
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