Gold Hiccup or Reversal? by Donald W. Pendergast Jr.
Here’s an inside look at the reversal now under way in the gold futures market, through the eyes of a system trader.
I'VE written several articles regarding what I saw as the impending reversal in both the gold and silver markets and in the US Dollar Index as well. October 7, 2010’s intraday reversal in all three of these inextricably linked markets was significant enough to suggest that this may indeed be the start of a notable (and tradable) corrective move lower to major support levels (resistance levels in the case of the dollar index). Here’s a closer look at the intraday reversal in gold, as seen by my Goldbugger futures trading system.
Similar in concept to the Agent Argent silver futures system, Goldbugger strives to latch on to every significant intraday surge in the full-sized Comex gold futures contract. Each full point on this contract is worth $100, so you can imagine the profits garnered as the system caught the “last train north” prior to Thursday’s reversal. The trade netted $3,060 before commissions and slippage and finally exited the trade only $11 shy of the swing move’s high point. Not every trade goes this well, of course, and the system only wins about 40% of the time, but with winners gaining more than three times the amount that losing trades suffer.