PHYS – 16 May

PHYS, the real gold bullion fund, is painting a consolidation triangle like the gold continuous contract chart. The pre-market has gold marginally higher, so it would appear that price is going to be right at the apex of the triangle on the open. The 13.02 swing high must be taken out to change the bias on this chart from neutral to an up trend. When looking at a candle chart like this, I think it is constructive to see where the 20 day moving average (grey dashed) is, currently at 13.13. If 13.02 is taken out, we technically have a brand new short term up trend in place defined by a higher low (12.66) and a higher high above 13.02. Is this a buy signal? I say no, not until price rises to or above the 20 day moving average. The problem with buying below the average is that many times the momentum is just not there and you can get whipsawed lower.

The Elder Impulse chart is designed to provide buy and sell signals based on momentum. Green bars indicate long trade entry, red bars short trade entry, and blue bars indicate exit from any held position. Green price bars show that the bulls are in control of both trend and momentum as both the 13-day EMA and MACD-Histogram are rising. A red price bar indicates that the bears have taken control because the 13-day EMA and MACD-Histogram are falling. A blue price bar indicates a split or equilibrium between buying and selling pressure. At any given point, either the green or red bar is ignored depending on the long term trend defined by the 65 day exponential average. If price is above the 65 day EMA (blue), the long term trend is bullish and the red bar is ignored. If price is below the 65 day EMA, the trend is bearish and the green bars are ignored. So the last valid signals for a trade occurred on 2 May when a blue bar signaled exit from a long trade and then on the 5th of May when a short trade was signaled. The red bars on the 3rd and 4th were ignored because the price was below the 65 day EMA. When you are close to fulfilling the parameters for a trade, you should scale down to the hourly chart to actually look for the trigger. The Elder chart works on all scales.

The hourly Elder chart is where I actually get my buy triggers from. Instead of 13 and 65 day EMA, it uses a 13 and 65 hour EMA. The same rules apply. The last potential buy trigger for a long trade was on 10 May. The daily chart above painted a green bar. But, the hourly chart is where I would have been looking and indeed a green bar painted in the second hour of trading on 10 May. Notice however that price was below the 65 hour EMA (blue) . This nullifies the bullish green bar and it should be ignored. Sure enough the next hour of trading turned the bar blue which signals exit from any trade. What happened to that green bar on the daily chart that got us excited in the first place? It turned into a red bar the very next day. The Elder charts are telling us that there are no clear momentum signals right now and therefore no trades are suggested. We of course know this from the candle chart and its consolidation pattern.

This entry was posted in Matrix Sentry TA, PHYS, Technical Analysis. Bookmark the permalink.

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