Chart of the Day: Gold

I am deeply suspicious of most indicators, most of the time. Indicators (with a few exceptions) reprocess the same open, high, low, close, and maybe volume data, and present it in a different format, usually with the addition of a good deal of lag. However, sometimes indicators can reveal structure that is not obvious on the chart. One such indicator is the SigmaSpike® indicator we use in Waverly Advisors’ published research that expresses each day’s return as a standard deviation of the past month—giving a volatility-adjusted measure of the day’s price action. Sometimes, this can highlight things that are not readily visible on the chart. Did you realize that yesterday’s close in Gold was the largest volatility-adjusted selloff since June, and the fifth largest in a year? It might be hard to see that on the chart, but this is a move that is worth watching for potential followthrough. Readers of our research have been short since September, and we see good downside potential in the trade. (Of course, failure and a nasty reversal is also possible, so correct stops are important.) Watch Gold and Silver carefully over the next few weeks.


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.

This Post Has 4 Comments

  1. 2face

    Very powerful indicator. Indicator is a tool that helps to analyse market. I dont know how to get it into MT4 platform. I hope some one can code it so we can share, because most of us are using different platform

  2. Sohrab Alborzian

    after the reversal that Gold had today, would you feel like its still on its way down?

    1. Adam Grimes

      That’s a good question, but I need to be very clear what this blog is for. The purpose of illustrating these patterns here is educational… nothing on this blog should be taken as any kind of trade advisory or endorsement. So, in general I’m going to make it a policy to not answer questions on trades that might be in progress… otherwise this could easily get out of hand. Thank you for understanding.

      1. Sohrab Alborzian

        Ya I can see that for sure

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