GOLD

As a follow up to the post from a few days back about GOLD, here is how we look at present. The breakout from the flag has actually been successful. I had commented about how those types of flag setups, with steep wide range bars were low probability, and that I expected this to fail. I was wrong about that, but not wrong about the probabilities. These types of patterns, even though this one worked, are not high probability trades. I am not going to catch every move. I just want to catch the ones correctly that I choose to trade. This is done by trading only the highest probability setups, and having the discipline to stand aside during these types of periods.

Trading can be very exciting, but there is no need for there to be excitement caused by foolishly losing money.

Notice how the commercials below are exiting this market on this rally, and that open interest has declined significantly. The open interest decline only is significant in that it is declining due to commercials exiting. If it were declining due to non-commercials exiting, it would not be a negative.

I would expect a sell spot to potentially develop if this trend continues.