Beyond Technical Analysis
GOLDGOLD had a sharp sell off like equities in the 1st week of March due to Central Banks across the globe pumping liquidity and reducing rates. Besides the domino principle of one pulling the other (losses in equities globally being cleared via unwinding of long gold positions) as one asset manages the other in a systematic risk environment.
Current set up suggest $1675 where it would complete its minimum Bullish Dragon (trigger - hourly close above $1630). Only if it sustains above that $1800 is the next level with some resistance near $1735. Else a dip till $1575 before it attempts another up move.
From a medium to long term prospective this could be the last leg of the rally from 2016, post this Gold could start a fresh downside cycle.
Basic of Gap theory(Common gap, Breakaway gap, Runaway, Exhaus )Gaps can offer evidence that something important has happened to the fundamentals or the psychology of the crowd that accompanies this market movement.
Gaps can be subdivided into four basic categories:
• Common gap
• Breakaway gap
• Runaway/ Continuation gap
• Exhaustion gap
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--> Common gap-:
Common gaps generally occur uneventfully or when there is nervousness among the investor and has low volume , generally gap is filled in the future .
--> Breakaway gap( Measuring gaps )-:
A breakaway gap is those which have high Volume and the chances are more to cover the gap . The traders who have invested in the wrong side need to cover them. A new change in the market has taken place. The point of news breakout becomes support or resistance.
--> Runaway gap-:
runaway gap has increased in liquidation and those who are holding the position will get panic and sell/buy. the runaway gap is caused by the trading limit imposed by the exchanges.
--> The exhaustion gap ( Island-cluster )-:
exhaustion gap happens near the end of the movie. Mainly have a high volume and have a large difference from the previous price, in this state of panic long down move is transpire due to a feeling or belief that bad things will happen. exhaustion gap quickly fills a gap when price reverse.
I will update shortly Real-Time use of Gap Trading Strategy shortly. Kindly comment, if you have any questions/suggestions for me. You can share your LOVE by giving LIKES .
DR REDDYmove above 3050/3100 can expect a 100 points move on upside
crucial level to watch is 2800 which might drag the prices towards lower end.
India VixIf it gives an hourly close below 70 then there would a v strong likelihood of further cooling till 50 where it has an alignment of support from Monthly down to Hourly. This in turn would get some steadiness to markets. Less of these wild intraday swings and lower probabilities of large daily candles. Near 50 it could then resume its upward journey. Whether this is going to be the CALM before the (next) storm or VIX is done with its carnage would be reviewed near about 50.
