Author: Nikolay Kositsin
How to Trade Gold Yearly Pivot Points (adapted from dailyfx article)
Gold 2013 Yearly Pivots :
The sudden and severe $141/oz. drop in gold in the beginning of 2013
caught many gold traders off guard. However, traders who watched gold
yearly pivots knew ahead of time that a close below the central pivot
(P) at $1661.75/oz.
Notice in the chart above how price hugged the central pivot red line.
The close below the yearly central pivot marked the beginning of a
year-long decline to 3-year lows.
Even after reaching a low of 1208, the subsequent gold rally in July was
stopped dead in its tracks at the S2 yearly pivot at $1392.79/oz. Gold
went on to make the low of the year at 1179.86. Yearly pivots were
useful for determining the beginning of the decline as well as locating
areas to re-enter or add more to a position. You may now be wondering
what the 2014 yearly pivots have in store for gold.
Gold 2014 Yearly Pivots :
Gold Yearly Pivot Trading Plan
Gold starts 2014 higher than where it left off in 2013. Crossing above
the psychologically important $1300 level, gold is a long way from the
lofty highs in the $1900 area. The first major yearly pivot hurdle is
just $40.00 away at the central yearly pivot at 1360.82. This was also
the highs of October 2013. Pivot points often act as magnets “pulling”
price up or down to the nearest pivot.
The current weekly Japanese candlestick pattern is an indecision
doji/spinning top. This gives us a “fork in the road” or decision point;
price could break higher or lower from this point and continue to trend
in the breakout direction. A new candle is due out next Monday and if
it can break above the 1332 high of the doji candle could lead to an
explosive move toward the R1 pivot and beyond. Moves above the central
pivot are regarded as bullish.
On the other hand, a break below 1307.26 low of the weekly doji candle
opens move toward the lows of 2013 in the 1186 area and a test of the S1
yearly pivot at 1024.25. Remember that yearly pivots represent
potential support and resistance. Using the pivot point calculation on
the high low and close of 2013, these levels can be created. Yearly
pivot levels can help traders determine price targets for taking profit
as well as entry and stop areas.