ONE FOR THE GAPPER
Time now to check back in on the GOLD market to see what is developing. Notice the 2 large gaps between open interest and the commercials on the chart. You can see from the first one a huge rally followed. In that case we had open interest declining and commercials expanding. This told us a very high percentage of open interest was commercials, a very bullish situation. Here we now have the opposite, open interest expanding, while commercials comprise a very small percentage, a very bearish situation. Also notice the low small speculator long position at the first gap, they were short of course at the low. Now we have made another new historic high last week in the small speculator longs in this market.
As I have stated in here previously, this is a textbook sell setup. The fact that it is also occuring right when the typical seasonal high occurs coupled with this also being where Larry Williams road map for this market this year calls for a turn, makes this one for the ages. I just cannot remember a market being setup better than this one is right now. As I always state, but will do so again for new readers, a setup is not an entry. A setup means that everything is in place on a weekly chart for a large move to occur in the direction of the setup. Daily entries are always another matter.
You can see here that the COPPER market has almost the identical setup, with the exception being the seasonals are a bit different in this market. A fundamental setup like this does trump the seasonals just as an FYI, but it is always nice to have them all which rarely happens.
So how to enter this trade?
First, depending on your time horizon, you could wait for a weekly close under the trendline I have drawn on the chart and just go with that. This week that would be about 1095. Obviously that will change as time moves on.
Second, you could wait for a similar type of trend break on a daily chart shown below.
The short term trend is up, so no reason to short until that breaks.
Third, you could use whatever oscillator patterns in say a MACD or moving averages, or whatever else it is that you use to enter and exit trades.
The bottom line here is that we have a market setup very well for a major move, how you actually trade it is up to you. I will put my entries in here when I do them. Actually I am contemplating a long in Silver at the moment due to a very short term pattern I use. I have not as yet decided whether or not I will do that trade or not. I do not like these holiday electronic sessions, they often have something screwy happen. This trade if I did it would be a very short term entry and exit.