Chart of the Day: Parallel Trendline in Gold

When markets are in consolidation (i.e., moving sideways) it is very difficult to find strong edges. Markets tend to be more random, and no consistent profits are possible in a random environment. We believe, based on higher timeframe patterns not visible on this chart (but see this post) that there is a high probability of a sharp breakdown in Gold. This week’s strength appears to challenge that thesis, but could simply offer an attractive entry for shorts at higher prices. We will watch price action around the upper edge of the pattern, defined by the dotted parallel trendline for clues to market direction. (See pgs 87-89 of The Art & Science of Technical Analysis for more information on this very useful tool.)


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.