Powers let the (or Trendreversing ) pattern to evolve in gold and waited for the breakdown.
When the the breakdown was completed on the hourly chart price was reversed immediately and the formed into a flag. We noticed the trick and I warned the traders to wait for a confirmation after the breakdown before stopping out the long position.
That is the main reason is better to use a "mental stop" in gold . You set a level where you decide to stop your position if price goes to the opposite direction. But reaching the stop level is not enough. Price has to close below that level and needs to have a follow through in the following hour(s). Friday we took out the previous low and price closed below it but the next hourly candle didn't give us the follow through so holding the longs was the good decision.
A lot of traders entered a short position as the pattern broke down. These short traders are trapped now in the bear trap below the pattern.
Before the close we tagged the upper of the flag.
We rallied for 18 days and we reached 1200$. It's a good level to turn down.
But gold usually never turns when most of the traders think it's time to drop. Gold usually prints 2-3 more green days before starting to fall : stopping out all the early longs and convince the late bulls this rally will last forever and we are going to the moon.
So I think these 2-3 days are coming at the beginning of next week before we print the cycle top.
These green days are the biggest gold rallies. If we break out of the flag next week Monday we can have the cycle top.
... and don't forget USA is closed on Monday. When USA is closed Asia likes to break out gold's price and run the stops of the USA traders during the holiday.These pops can be 50-60$ pops in 2 days.
I'm waiting for this scenario...
Yes we can rally up to 1240-45 easily but we are getting late in the cycle with very nice profits so time to book some.
That would be an economic suicide.
Good that we got out. RSI saved us getting caught.
Getting closer to our entry point.
Early next week I will be long again.
It's getting risky that we will break up again...
After this the US $ will begin to recover and rally and there will be a retrace mentioned of gold back to recent lows so be wary of the coming highs and get out in good order.
After 1250 short or you will wait to correct and futher long???