May 15, 2006: More down

Sheesh, talk about missing the mark on market analysis! I was expecting a bounce on Friday - yea right we got that :P Ok, so we got a mini-bounce today hehe (ok ok enough lemme focus now). The market sure got it's butt kicked on the short side last few days. That confirms that NQ/Naz is still king. The market will eventually follow them and it's only a matter of time. I didn't trade the indices today since I left early after trading Gold but the charts do tell me that we're not done yet on the short side.
So what is it that I see? Well, it's the Dow again! There's a huge line of defense just below today's lows that dates back to the dual topping/bottoming patterns around the 11230-60 area. This is the last line of defense for the bulls as far as I'm concerned.


In my last blog entry last Thurs. I mentioned the possibility of having a considerable pullback on Gold and I also highlighted that tops are confirmed by topping patterns especially on Gold. Well, guess what happened? Exactly :) The short entry is marked on this chart and the one below to show what I was anticipating and seeing. The fact that Euronator didn't take out 1.30 proves that it'll be a major resistance level and I don't think Gold will advance that much unless that's taken out.

I've been noticing that currencies correlate very well w/metals during early hours and definitely made me comfortable shorting Gold. Silver had a classic fake b/o on daily and many got trapped big time. That surely added fuel to the fire. Look at the triple bottom on Gold being taken out? You think that it'll be taken out to the upside? That would take major buying and it'll prove to be a strong resistance on Gold at least for next few days.




This was as perfect setup/trade as it gets - one of my best for sure. Wish all of them were like that :)


Note: I've added volatility stop to currencies & metals to trail. Seems to be working very well. Settings: 4 bars 1 multiplier.