Gold Breakout - Target 2,530 to 2,700 | Peter L. Brandt

This is a FOR REAL breakout in Gold. Goldfinger points to a target range of 2,530 to 2,700.

 

Peter L. Brandt @ Twitter/X (Mar 06, 2024)

 

June is typically the lowest month for Gold. 

The graph is based on the average prices; there are times when June tops rather than bottoms. 

Buy dips around monthly pivot levels. 

Friday’s Commitment of Traders (COT) Report from the CFTC had an interesting point about gold. The big money "commercial" traders responded to the rally in gold this week by posting the biggest jump in years in their collective net short position. This marks this week’s pop as at least a short term price top.

There has also been a big jump in total open interest lately. Usually such events mark a blowoff top in gold prices, although occasionally they are seen at a breakout point.

 Curiously, though, the small speculators in the "non-reportable" category were not chasing this week’s rally, and instead they reduced their net long position. They have not been net short as a group since 2016, so the analysis task consists in evaluating their relative net long position as a group. Having the small specs feel scared by this rally says it has some enduring legitimacy, once the short term overbought condition can get worked off. 

Tom McClellan @ Twitter/X (Mar 09, 2024)

The Yearly Market Maker Breakout Template │ S&P 500 Index 2018 - 2023

S&P 500 Index - 2018 to 2023 (blue line = 3 week moving average)

 

In the Yearly Market Maker Breakout Template price expansion takes out 

(1.) the High  

or 

(2.) the Low 

or 

(3.) the High and the Low 

of the previous year's price-range. 

 

Though price started expanding to the upside since the first week of 2023, 

neither the high nor the low of the 2022 price range has been breached by mid-December.

2023 remains an 'inside' year.

S&P 500 Index (15 minute bars) - December 5 to 13, 2023 (golden line = 3 day moving average)

Price currently moving within a bullish Weekly Market Maker Breakout Template;

printing new daily, weekly, monthly and quarterly highs.

Price range of Wednesday, December 13 (FOMC-day), the narrowest since weeks - so far.  

 

Three-Push Reversal Patterns | Cameron Benson

There are a lot of varying opinions about how the market moves, such as the Wyckoff method, Elliott Waves, Stacey Burke Trading, Steve Mauro’s BTMM, etc. However, one thing that all of these methods and models have in common is that the market moves in three pushes.

 

In all timeframes price is always in some three-push pattern. Price develops in fractals, and everything happening on a higher time frame happens far more frequently on lower time frames. Be aware of Other Time Frame (OTF) traders, of previous monthly, weekly, and daily highs or lows. It helps us to identify liquidity areas. Where are the entry and the stop loss orders? Where is the money, at the upper or at the lower end of a range?

 

After the third push into one direction, price is going into consolidation. During the second push retail-traders believe that price is going to continue in the same direction, and everybody jumps in. This is the market maker’s trap to harvest entry and stop loss orders during consolidation. The third push is already part of a larger peak formation reversal pattern. 

 

Al Brooks: Wedges and other Three-Push Reversal Patterns.

There are four different variations of the three-push pattern that can be observed on all timeframes:             

 

          1.             3 Levels, also referred to as ‘stair stepping’.
            2.             3 Pushes:
                                a.   Stair Step.
                                b.   1, 2, Pause, 3.
                                c.   1, 2, 3.
                                d.   1, Pause, 2, Pause, 3.
                                e.   3 Burst Impulse Candles.
            3.            3 Pushes out of consolidation in any of the above listed variations.
            4.            Working Levels (3 Pushes)
                               a.   Triple Tops.
                               b.   Triple Bottoms.  

 

Quoted from:
Cameron Benson (2023) - Decoding the Market Movement Algorithm. (video)

 

Three Pushes and Levels out of consolidation:
The Bearish and the Bullish Market Maker Cycle.

See also:
Stacey Burke (2022) - Three-Push Patterns. (video)

Stacey Burke (2022) - Best Trade Setups Playbook. 

Al Brooks (2011-2012) - Trading Price Action: Ranges, Trends & Reversals.

The Four Guiding Principles of Market Behavior | Momentum & Trend

Principle 1:     Trend is More Likely to Continue its Direction than to Reverse

With price established in a clearly defined trend of higher highs and higher lows, certain key strategies and probabilities begin to take shape. Once a trend is established, it takes considerable force and capitalization to turn the tide. Fading a trend is generally a low-probability endeavor and the greatest profits can be made by entering reactions or retracements following a counter trend move and playing for either the most recent swing high or a certain target just beyond the most recent swing high. An absence of chart patterns or swings implies trend continuation until both a higher high and a higher low (vice versa for uptrend changes) form and price takes out the most recent higher high.

Be aware that recent statistical analysis of market action (from intraday to 20 day periods) over the last five years shows that mean reversion, rather than trend continuation is more probable in many equities/indices (as shown by more up days followed by down days than continuation upwards). For the current market environment, until volatility returns (as it may be doing now), this rule may be restated, “Trends with strong momentum show favorable odds for continuation.”

 

Principle 2:     Trends End in Climax (Euphoria/Capitulation)

Trends continue in push/pull fashion until some external force exerts convincing pressure on the system, be it in the form of sharply increased volume or volatility. This typically occurs when we experience extreme continuity of thought and euphoria of the mass public (that price will continue upwards forever). However, price action – because of extreme emotions – tends to carry further than most traders anticipate, and anticipating reversals still can be financially dangerous. In fact, some price action becomes so parabolic in the end stage that up to 70% of the gains come in the final 20% of the move. Markets also rarely change trends overnight; rather, a sideways trend or consolidation is more likely to occur before rolling over into a new downtrend.

 

Three Things Markets do:
1. Breakout and Trend.
2. Breakout and Reverse (False Breakout).
3. Trading Range (High and Low).

 

 

Principle 3:     Momentum Precedes Price

Momentum – force of buying/selling pressure – leads price in that new momentum highs have higher probability of resulting in a new price high following the next reaction against that momentum high. Stated differently, expect a new price high following a new momentum high reading on momentum indicators (including MACD, momentum, rate of change). A gap may also serve as a momentum indicator. Some of the highest probability trades occur after the first reaction following a new momentum high in a freshly confirmed trend. Also, be aware that momentum highs following a trend exhaustion point are invalidated by principle #2. Never establish a position in the direction of the original trend following a clear exhaustion point.

 

Principle 4:     Price Alternates Between Range Expansion and Range Contraction

Price tends to consolidate (trend sideways) much more frequently than it expands (breakouts). Consolidation indicates equilibrium points where buyers and sellers are satisfied (efficiency) and expansion indicates disequilibrium and imbalance (inefficiency) between buyers and sellers. It is much easier to predict volatility changes than price, as price-directional prediction (breakout) following a low-volatility environment is almost impossible. Though low volatility environments are difficult to predict, they provide some of the best risk/reward trades possible (when you play for a very large target when your initial stop is very small – think NR-7 Bars).

Various strategies can be developed that take advantages of these principles. In fact, almost all sensible trades base their origin in at least one of these market principles: breakout strategies, retracement strategies, trend trading, momentum trading, swing trading, etc. across all timeframes.

 

Concept Credit for arranging the four principles: 

Linda Bradford-Raschke (2000) - Swing Trading and Underlying Principles of Technical Analysis. 

In: Rick Bensignor (2000) - New Thinking in Technical Analysis: Trading Models from the Masters.

 

See also:

Richard W. Schabaker (1932) - Technical Analysis And Stock Market Profits: A Course In Forecasting.

Robert Edwards & John Magee (1948) - Technical Analysis of Stock Trends.

Arthuer A. Merrill (1980) - M&W Wave Patterns.

Peter L. Brandt (2011) - Diary of a Professional Commodity Trader.

Aksel Kibar (2021) - Three Types of Breakouts. 

Stacey Burke (2021) - Weekly Template - Three Things Markets do.

TPR (2022) - The Bullish & the Bearish Market Maker Cycle.
TPR (2022) - Daily Range = Accumulation + Manipulation + Expansion + Distribution (AMD).
TPR (2022) - Daily and Weekly Market Maker Cycles.
TPR (2022) - 3 Bar Patterns- The Smallest Fractals of Market Structure.