Gold Did What Today?
It’s been a very long time since gold put in a reversal day after putting in a $30 / oz. range. “Ohhhhh, the humanity!”
This is of course the most despised day of the month. Not only do we have to put up with government lies regarding employment, we also got a shortened trading day. Besides the LIA’s [Lemmings in Asia] we put up with every day, now we got cross currents of a Friday to boot. Did I ever mention just how much I hate NFP Friday?
The algorithm actually gave a good buy signal on the move back up at 1685-1686. The problem is that this is about $10 off the low. After the buy signal, gold broke about $5 before starting a monstrous rally.
Those of you that have the algorithm know that it is pretty responsive on a short term basis. Using a 5M candlestick, the most responsive buy signals [when conditions are right] happen, the vast majority of the time, within $2 - $4 of the most current low [or the day’s low]. The other buy signal usually happens within $3 - $6 of the most current low [or the day’s low].
Conditions were right for the fastest buy signal and it was $10 off the low. When the other buy signal happened the market price was about $17 off the low. Considering we already had a $30 / oz. range in the books, if I buy it, where do I put my stop?
If I put the stop $15 under my buy, if it gets hit, now what do I do? The fact is it’s a Friday in the U.S. session and I now have a $15 / oz. loss; how do I make this back?
Sure, in hindsight, it’s easy to say just get long. But for every one day like this there are 9999 where you would be kicking yourself in the head. Remember, it’s a probability distribution you should care about..
Yea, I eventually got long and made a couple of bucks after a small retracement, but what I am most happy about today is 2 things; 1) the algorithm performed well, which is why I am back to normal trading Sunday night, and 2) another NFP day is over.
Have a good weekend everyone.