Chart of the Day: Small Consolidation in Gold

Sometimes, important technical patterns are easy to miss. A small bar near the extreme of a recent thrust (near the extreme means near the low of a downthrust or the high of an upthrust) can often function as a small consolidation. It is possible to initiate shorts on a breakdown out of this pattern, but such a move may take 2-3 days to develop. I have written about this potential short in Gold extensively, both in my research for Waverly Advisors and in a few notes on this blog. This is an example of a very small, tight consolidation that can provide a favorable entry into a move that is already underway. (Of course, consider the possibilities for pattern failure and plan accordingly.)


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.