Gold Price Action: Time to Wait for the Right Entry?Great opportunity to revisit what we talked about earlier, specifically on November 18th, the pattern in gold.
Just to recap : there’s a level where the price moved quickly, breaking through a low or high (breakout strategy), which triggers a surge of activity among traders (the price moves fast and breaks something, and everyone jumps in). Later, the price comes back to that level, first cautiously, then it breaks through and, once it holds, it goes in the opposite direction of the breakout, making life tough for those holding opposite positions and forcing them to close out, which pushes the price up or down.
Alright, now let’s look at how gold has been behaving today and yesterday around $2705. What do we see? The local high was broken at point (1), the price came back and touched the level from above (2), then it returned and broke through quickly without holding (3). If at level (1), where the buyers are, they didn’t fully unload, the price could come back to it from below and drop like a rock as soon as it touches, forcing those remaining long positions to close out in a hurry.
It makes sense to wait for that return and then open shorts, instead of chasing after a price that’s already run away.
