Trade Setups Commentary: Spot Gold Gets Hammered Lower, 20th December 2012

AppId is over the quota
AppId is over the quota

Trading Setups / Chart in Focus:

XAUUSD – Spot Gold loses significant ground

In our commentary from Monday we discussed that Gold had found some support off $1685.00 and formed a bullish fakey / pin bar signal off that level. We also discussed the importance of support at $1672.00 and that it was really a “line in the sand” level. Since then, that bullish fakey / pin setup just fizzled out as price moved lower and broke all support and subsequently sold-off very aggressively over the last three days. We would note the inside bar trading strategy that formed yesterday, we discussed the potential for the market to move lower from that inside bar setup in our members commentary yesterday. From here, traders can watch resistance for sell signals if the market rotates higher. There’s also a key support coming in not far below near $1630.00 that could cause this current downtrend to stall or reverse higher.

Important lesson:

To see a “better” example of a cleaner and more logical fakey strategy we can look to the one on the chart below that formed on December 12th. This fakey had a much smaller mother bar than the one from Monday of this week, making it a more manageable trade and was with the recent bearish momentum. It has since led to a huge move lower…


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Forex Commentary:

In the currency markets today, the euro was volatile in trading against the U.S. dollar, ending the day mostly unchanged but with a slight gain in light pre-holiday trading.

Most of the other major currencies ended the day essentially unchanged against the U.S. dollar, the British pound gained on the greenback.

Other Markets:

In the U.S. markets today, stocks pared early losses after U.S. politicians reaffirmed their commitment to continue working on a solution to the U.S. “fiscal cliff” problem.

The Dow added 59.75 points, or 0.45 percent, the S&P 500 added 7.88 points, or 0.55 percent, and the Nasdaq added 6.02 points, or 0.20 percent.

Upcoming important economic announcements (New York time): 12/21/2012

4:30am EST: Britain – Current Account
4:30am EST: Britain – Public Sector Net Borrowing
8:30am EST: Canada – Core CPI m/m
8:30am EST: Canada – GDP m/m
8:30am EST: United States – Core Durable Goods Orders m/m

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