Chart of the Day: Bullish Consolidation in Gold

The small consolidation (B) above the top of the parallel trend channel should provide another spot to add to or to initiate long positions on further strength. One way to trade this pattern would be to simply enter a long on a strong close above this resistance, though an intraday trigger is probably a cleaner entry. (A stop somewhere above 1,650 should work for both entries.) Note that (A) marks the corresponding entry to the GLD chart I pointed out at the end of last week. This would have been a better entry in terms of trade location, but don’t forget to look for other opportunities if you missed the initial trade.

Note also that this small consolidation is a variation of the nested pullback, a pattern I covered in detail in The Art & Science of Technical Analysis.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.