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XAUUSD – Gold Daily
Gold posts record-high finish, lifted by Fed rate-cut hopes, Middle East violence
Gold futures settled sharply higher Wednesday, with prices marking a fresh record-high finish, as expectations for a U.S. interest-rate cut in the coming months and violence in the Middle East lifted the precious metal’s investment appeal.
“Heightened Middle East tensions and hopes for Fed rate cuts have restored gold” back above the psychologically important $2,400 level
Technical view : Channel Support held and now we have to see how it will react on previous high 2483.68 and if above next hurdle is at 2.600
Bullish as bullish can be 😀
What is a Liquidating Market and How to Trade It
Not all markets should be treated the same. It is therefore tmportant to identify whether you are in a trend, correction, consolidation or what I call a liquidating market.
What is a liquidating market?
A liquidating market is one where the flows are looking to exit positions and not add to existing ones.
For example, take the current market where short JPY carry trade positions (we will discuss carry trades) are unwinding in forex, gold, stocks. One of the lead in fx is AUDJPY, which is down 11 days in a row. See this 15 minute chart from July 25, 2024 and not how at each pause, there is a minor uptick followed by a push to fresh lows.
So the question is once you recognize the market is in a liquidating mode, how do you trade it?
IDENTIFYING THE TYPE OF MARKET YOU ARE IN IS ONE OF MY KEYÂ FOREX TRADING TIPS.
The way these types of markets tend to trade is that they move in spurts as orders get executed and positions liquidated. Once the order is done, you may see some backing and filling as selling (as in the above case) is done and bottom pickers come in. (and vice versa when short positions are liquidated).
This often gives a false sense of a bottom as the market backs away from the low until the next wave of sell orders. This squeezes those trying to pick a bottom as they get stopped out by fresh selling and a new low.
Much depends on whether key technical levels get triggered as this can accelerate the move and bring in fresh selling. Liquidating markets will eventually exhaust themselves and finally reach a bottom, either by a key technical level holding or by the selling just running out of steam.
How to trade a liquidating marker
The way to trade a liquidating market is either to sell (or buy as the case may be) on the backing and filling but that is often difficult as it is hard to find a nearby stop if the chart is like a one-way street.
Another way is to put a stop entry at the low or high to go with the next wave of sell (or buy =0 order liquidations.
The other way is to wait it out and only go against the move if you sense it has completely lost steam.
However, the tendency is to buy at each pause, hoping to catch the falling knife after a new low. The danger in this approach is that by the time a low is in place you may be too beaten up to catch the bottom.
The key point is to recognize the type of market you are in and that the hardest trade is often the right trade. The easy and in this case the wrong trade is to buy the easy to get filled at what looks like an attractive level trade.
Note I used a market that is liquidating long positions as an example. The same principle applies to when short positions get liquidated.
A taste of things to come
Look at this chart and you get a taste of what you will see here going forward.
This is a chart with my Amazing Trader program running on it. It is the definition of a liquidating marlket.
Note the top 2 blue lines, the first indication of a potential top and change in direction.
Often after a third line, you will see an acceleration, in this case to the downside and you can see what followed.
This is a 4 hour chart but the same patterns work on any time frame, 5. 15. 30 etc.
Now let me tie this together.
Do you remember what I said about the importance of the high and low of the day or time frame chart.
This is the only level where there are stops to run., If the market cannot break to a new high or low, it will lose interest on that side and probe the other side in search of stops.
This is what happened in gold after breaking to a new record high.
This is a simple and common sense way of looking at trading. You can use any charting application to apply it. I find The Amazing Trader is the clearest way to identify a pattern.
We will cover the finer details in a later discussion/
XAU/USD: Gold Soars to Record Above $2,480 on Rate Cut Hopes
·        Gold prices blast to new record.·        Bullion hits all-time high of $2,480.
Gold XAUUSD is on a tear. The precious metal hit an all-time record of $2,480 per ounce during the Asian session Wednesday as traders were feeling confident to pile their long bets. Optimism over the Federal Reserve’s interest rate cuts is back after a slew of favorable economic data and the man himself striking an upbeat tone on inflation — Jay Powell said Monday that the Fed is happy with the inflation’s downward trajectory.
