Outside Day Reversal in Gold Enticing Bulls

Strategy of the Day 11.18.2019

Outside Day Reversal in Gold Enticing Bulls

Gold futures have traded back through highs of the day, after making a low of 1456.6 in early trading. This constitutes an outside day reversal pattern to the upside, if the market can close positive AND take out highs of today (tomorrow, would be the confirmation). While Gold prices have remained under pressure into the fourthquarter of this year, the near-term price action suggests a technical short covering rally back to test resistance at 1485 next. The outside day reversal is one of my favorite patterns to trade, as it exposes a snapshot of market participation which trapped a group of traders on the wrong side. The psychological effect of the head fake low, typically results in a short covering squeeze which creates the most pain for the market participants.

While the medium-term trend is still lower for Gold, the short-term rally will put pressure on those short and should take the market higher to test bigger more robust resistance (if the down trend is going to resume). My long-term opinion is that Gold will have another leg lower towards...

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