Forum on trading, automated trading systems and testing trading strategies
Indicators: FP channel
Sergey Golubev, 2014.02.22 07:22
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.
Something Interesting in Financial Video July 2013
Sergey Golubev, 2013.07.13 19:50
Trading the Gold Silver Ratio :
For the hard-asset enthusiast, the gold-silver ratio is part of common parlance, but for the average investor, this arcane metric
is anything but well-known. This is unfortunate because there's great
profit potential using a number of well-established strategies that rely
on this ratio.
In a nutshell, the gold-silver
ratio represents the number of silver ounces it takes to buy a single
ounce of gold. It sounds simple, but this ratio is more useful than you
might think. Read on to find out how you can benefit from this ratio.
How the Ratio Works
When gold trades at $500 per ounce and silver at $5, traders refer
to a gold-silver ratio of 100. Today the ratio floats, as gold and
silver are valued daily by market forces, but this wasn't always the
case. The ratio has been permanently set at different times in history -
and in different places - by governments seeking monetary stability.
Here's a thumbnail overview of that history:
How to Trade the Gold-Silver Ratio
First off, trading the gold-silver ratio is an activity primarily undertaken by hard-asset enthusiasts like "gold bugs". Why? Because the trade is predicated on accumulating greater quantities of the metal and not on increasing dollar-value profits. Sound confusing? Let's look at an example.The
essence of trading the gold-silver ratio is to switch holdings when the
ratio swings to historically determined "extremes." So, as an example:
For those worried about devaluation, deflation,
currency replacement - and even war - the strategy makes sense.
Precious metals have a proven record of maintaining their value in the
face of any contingency that might threaten the worth of a nation's fiat currency.
Drawbacks of the Trade
The obvious difficulty with the trade is correctly identifying
those "extreme" relative valuations between the metals. If the ratio
hits 100 and you sell your gold for silver, then the ratio continues to
expand, hovering for the next five years between 120 and 150, you're
stuck. A new trading precedent has apparently been set, and to trade
back into gold during that period would mean a contraction in your metal holdings.
What is there to do in that case? One could always continue to add
to one's silver holdings and wait for a contraction in the ratio, but
nothing is certain. This is the essential risk to those trading the
ratio. It also points out the need to successfully monitor ratio changes
over the short and medium term in order to catch the more likely
"extremes" as they emerge.
There's an entire world of investing permutations available to the
gold-silver ratio trader. What's most important is to know one's own
trading personality and risk profile. For the hard-asset investor
concerned with the ongoing value of his or her nation's fiat currency,
the gold-silver ratio trade offers the security of knowing, at the very
least, that he or she always possesses the metal.
Sergey Golubev, 2018.07.13 08:42
Crude Oil - oil/gold price ratio (based on the article)
Chart was made on MT5 with Brainwashing system/AscTrend system (MT5) from this thread (free to download) together with following indicators:
Same systems for MT4/MT5: