Transcript of I'm Shorting Gold. (Bull Trap Set...?)
TraderNick
0:00Yesterday, gold dropped huge and today0:03we're getting a little bit of a bounce0:04at the time of recording this. The0:06question is, is this a bounce worth0:08fading or is there more room for gold to0:11rally back? Well, in today's video, I'm0:13going to give you an update on my0:14current trades on gold, what I'm looking0:16to do with that position, and my overall0:19view on gold going forward, both in the0:21short and longer term. As we get0:23started, remember this is not financial0:24advice. Trading is high risk. Please be0:26careful.0:28Okay, so from a daily chart perspective,0:30starting out here, we are getting a0:32bounce actually just below this major0:35level of support. And that immediately0:37draws in a question as we bounce from0:40this current area of support that we0:41found around 4120. We have the 42000:45level as a major past level of support0:48turned potential resistance intraday.0:50And when we take it down to a 4hour0:52chart, the picture also becomes a little0:54bit more clear as to just how oversold0:57we had gotten yesterday. I mean, we0:58flooded just straight down all day long1:01yesterday with very little breaks. And1:04now we're catching a little bit of a1:05bounce. So, following such a large drop1:08intraday yesterday, we would do a little1:10bit of a bounce here. The question is,1:12is there more to it? And should I get1:14out of my gold position or should I1:16double down? What are we going to do1:17here? So, if we just get a Fibonacci1:19retracement tool out here really quick,1:20just to see where we're at, you can see1:22that we have not even yet tested the1:2438.2% retracement, which also this 50 to1:2838.2% retracement zone lines up really1:30nice with the 4200 round number play or1:34round number area that we saw some1:35interesting reaction to on the daily1:37chart. Like I said, we broke the 4200,1:40huge level of psychological support1:42looking left. This was the breakout1:44point and losing that yesterday I argued1:46was a really strong point for the bears.1:49And so as we look into this bounce that1:51we're seeing today, my personal view on1:54it is that most likely I think that we1:56are going to see some kind of1:58follow-through from the bears. So if we1:59do get a rally up into the 38.2 50% to2:0361.8% 8% zone. My educated guess here,2:07we never know with certainty what prices2:08are going to do, but I generally think2:10that sellers will try to hold these2:12levels of resistance and continue what2:15was started yesterday, which is a follow2:18through of the selloff that we saw in2:20the first half of this year. So, I've2:22got my stop loss here from my initial2:23entry all the way up here at 4277. I am2:27looking for a chance to actually manage2:29the stop and tighten it up a little bit,2:31but I'm not really willing to put my2:33stop really close. Someone actually2:34reached out. They were like, "Nick, what2:36about putting your stop loss just above2:37this area here? Doesn't that make2:39sense?" And again, I think that beginner2:43trader Nick was very, very wanting to2:46close out profits. I always wanted to2:48just protect my gains whenever I had2:50them on the screen. But what I've2:51realized after doing this for as many2:53years as I have is that a lot of times2:55by trying to overprotect profits, I2:57often times just got out of great trades3:00way too soon. So instead, I've got my3:02stop loss trailed a little bit. I can't3:04lose money on this position. Even if the3:06worst case for my short position3:08happened, which is gold rallied all the3:09way up here, I'm still taking a couple3:11thousand worth of profit. So I am in3:14certainly no situation to be upset in3:17either scenario. Now again, it's going3:19to happen sometimes where by leaving3:21your stop-loss loose onto the on the3:23trade, you're going to give back a lot3:25of gains sometimes, but what you get in3:28exchange for that is the possibility or3:30the increased probability I should say3:32if I am right in thinking gold can3:35continue to move lower that I'll be in3:37the trade still, which matters a lot to3:39me because again, I still think the3:41thesis for lower gold prices still3:44stands. And this normal bounce here3:46should not be something that I overreact3:48to. I hope that makes sense. But again,3:50when you get a big move like this, often3:51times you do get a rally the next day or3:54two. And so I wouldn't be shocked at all3:56if we do rally up into these levels of3:58resistance to test the resolve of the4:02bears. Right? So my thought process here4:04is that really I would like to see at4:06least the 61.8% retracement of this big4:091-day move or I guess two and a half or4:12two days move. Uh, I'd like to see that4:13area hold. If that breaks, then it is4:16probably time for me to take my profits4:18and move on to the next idea. And while4:20this was a really great move yesterday,4:22this is not actually the trade that I4:24was going for. The trade that I'm going4:25for is the one that keeps going, right?4:28I'm looking for a move down, broadly4:30speaking, to 4,000 and perhaps even4:33lower this year. That's the type of4:35trade that I'm ultimately trying to4:37capture. And it's rare to get those kind4:39of moves in markets, but those are the4:41ones that I ultimately trade for. I'm4:43looking for that type of move where I4:45can just keep trailing a stop-loss and4:47let a winner get very large. And as4:49always, there's pros and cons to4:50everything. When you try and catch very4:52large runners, you inevitably also give4:55back a lot of gains sometimes, but every4:57once in a while, you catch the big one.4:59We'll see if that's this trade or if it5:01is on to the next after this. From a5:03macro perspective, I still really like5:04the gold short. And today we have uh at5:07the time of recording this it's 9:205:09a.m. in 40 minutes we have CB consumer5:12confidence numbers coming out as well as5:14we have Jolts job openings numbers. Now5:17what's interesting here is that both of5:19these metrics that are coming out today5:21uh previously came in in a way that was5:24basically worse than expected and a5:27bullish factor for gold. Let me explain5:29what I mean by this. Consumer confidence5:31previously came in worse than expected.5:33A negative surprise, which is bullish5:35for gold. Remember, consumers feeling5:37not great is more of a reason to buy5:39gold than sell gold because consumers5:42weak basically may push the Fed to want5:44to lower interest rates. Now, it's one5:47of many variables that they're5:48considering, but if this data point5:50today comes in better than expected,5:52this would be more of a bearish lean for5:54my gold position. And simultaneously, if5:57Jolt's job openings come in in a way5:59that is better than expected day, this6:01could flip to a bearish reading, giving6:03me more resolve to the short side. And I6:06will say that from here, let's just say6:08gold's reading in edgefinder jumps up to6:10or I should say jumps down to like a6:12minus8 or minus 10. There's a6:15possibility where I actually look to add6:17to my short position. So, I like to add6:20to winners if my basically my system6:22here edgefinder is increasingly more in6:26favor of my bias. So, if today's6:29macroeconomic data and really this week,6:31right, we have non-farm payroll, we have6:33ADP numbers, like we have a lot of data6:34coming this week. If the data starts6:36shifting more in favor of gold shorts,6:38then I could actually look to get more6:40short than I currently already am.6:43However, if the data contradicts my6:45view, let's say, for example, that6:47non-farm this week comes in really weak,6:50that would be more of a bullish thing6:52for gold. Gold likes weakness in the6:54jobs market. If the jobs data comes in6:56weak, that pressures the Fed to6:58potentially keep interest rates uh at7:00hold or even cut them eventually, and7:02that would be more of a bull thing for7:04gold. So, I can't predict the non-farm7:06payroll. Instead of trying to predict7:07this stuff, you've probably heard it7:09many times, great traders don't predict,7:11they react. this is how I react. I read7:13that like that concept. By the way, just7:15a side note, I always heard that and it7:17always frustrated me when I was a newer7:19trader because I would hear the people7:20say, you know, I'd hear these7:22professional traders talking about how7:24they don't predict prices. I'm like,7:25well, then how do you make money? Like,7:27how are you making any money if you're7:29not predicting what is going to happen?7:31And what I understand now is that when7:34people say react, don't predict. What7:37they're saying is they have a system7:39that has a conditional set of rules and7:42they're just following those rules to a7:44T. And so in this case, right, if my7:47data points here that I'm looking at,7:49all these consumer price index, producer7:51price index, non-farmms, PCES, if these7:54data points all start to trend in a7:57particular bias direction, I am not8:00going to try and predict the change of8:03that. I'm going to follow the data as8:05it's coming in. I hope that makes sense.8:07Another way of doing this is a very8:10simple visual is let's just say you are8:12using a 200 day moving average. A very8:16simple react don't predict would be to8:18say if price is below this you're8:20bearish. If price is above this you're8:22bullish. Right? That's what react don't8:26predict means. Predicting would be8:28saying I think this has gone too far.8:29I'm going to bet that this thing's going8:30to come all the way back. That's more8:32predicting. Right? You're predicting a8:34change in the trend. Whereas when I talk8:36about macro trends and price trends, I8:39talk about following and reacting to8:42those data points rather than trying to8:44think I know where they're going to turn8:46around, what's going to happen next. I'm8:48not going to predict what's going to8:49happen with a non-farm because I don't8:52know and I don't have to know. I can8:54follow the data and use a system like8:57edgefinder to map out what those data8:59points are generally suggesting about9:01the trend in the inflation world in the9:04economic growth world and the jobs9:07market. Right? So using software to9:09simply react to what data points are9:11coming in and to build a bias around9:13that. If you don't have access to9:15EdgeFinder and would like to try it out9:17for free, scan the QR code that you see9:19on the screen right now or click the9:20link in the description down below in9:22this video. We want people to try out9:24our tools because I genuinely think that9:26if you try Edge Minder, you won't want9:28to trade without it. The having stuff9:30like this where you can kind of scan9:32economic data at a glance or for example9:35like this is our top setups macro page.9:37On this page, you can see it breaks down9:39economic growth metrics, inflation data,9:41labor data, and it tells you which9:43markets are generally seeing a pattern9:46of strength or weakness. But we don't9:48just do macroeconomic data. We also9:50track trend, seasonality, what's going9:52on with the commitment of traders data,9:54crowd sentiment and extremes in crowd9:56sentiment and many more things. So9:58within EdgeFinder, what this is doing10:01when people say react don't predict,10:04this is my way over the last 5 years, my10:07team and I have been building this tool10:09as a way to react to data coming in that10:12moves markets. And so by looking for10:15situations where the trend and sentiment10:17analysis as well as macro fundamentals10:20are aligned on a particular asset, we're10:23trading with the wind in our sales. At10:25least that's the effort anyways. If you10:27don't have access to it, all the10:28information to get access to this tool10:30or to try it out can be found in the10:31description down below. So speaking of10:33EdgeFinder, let's take a look and see10:34what else we have in terms of setups for10:37the rest of this week. So, if I'm10:39looking at a couple things that are10:40getting bullish ratings, what stands out10:42to me on this list is dollar yen and the10:44US dollar currency index. Let's take a10:46look at the dollar index first and then10:48we'll flip over to dollar yen. So, the10:50dollar index here just looks really10:53really strong. We are back through the10:54highs and again this is partially uh why10:56gold has you know dropped so sharply at10:59the start of this week. I generally11:00think that with the dollar index we are11:02probably headed back to fresh highs here11:04in recent months. uh with a move back up11:06to 102 I think being very possible uh in11:10coming weeks. Again, just following the11:12trend here. We have a lot of momentum11:14forming. The moving averages have all11:16started to align back in favor of the11:17bulls above the 20, the 50, the 100, and11:20200 day simple moving average. Uh, and I11:23do think that if you do get a11:24retracement in the dollar that there11:26will be likely buyers lined up to buy11:28the dip on it and continue to bet that11:31the yield story will continue to be a11:34one of hawkishness until the conflict in11:37the Middle East breaks. Now, again, I11:39want to point something out. If you just11:41take a look at the economic data that we11:43have recently been getting here in the11:44states and the AI buildout not slowing11:48all of this you know uh spending and11:50capital markets coming to the states as11:52well as the national debt being11:54tremendous yields in my view are likely11:57to keep trending higher that is until12:00you get something that changes in the12:02Middle East and again reacting I can't12:05predict what's going to happen in the12:06Middle East but I'm reacting to the fact12:08that the trend right now is a stalemate.12:11Stalemate continues to suggest oil12:14prices remain elevated, yields remain12:16trending higher, the dollar remains12:18strong, and until that breaks, in which12:21case I will flip to the other side of12:23this most likely, I'm going to trend12:25follow the current geopolitical/mro12:28environment. So, for now, I remain12:30bullish on the dollar on retracements.12:32And if I pull up the dollar Japanese yen12:34here, this one also, I don't really like12:36the chart to be completely honest. I12:38would like to see this thing uh breaking12:39out, moving higher. So, I'm probably not12:42going to take any trades on this one.12:43But, if you were to, for example, see a12:45breakout above the 160 level with12:47conviction, like something like this,12:50like a big breakout here, uh then I12:51could potentially look at a momentum12:53trade to the upside. If you're a futures12:54trader looking to get funded, then check12:56out today's video sponsor, Prop Shop12:58Trader. Prop Trader allows traders a ton13:01of room to scale up all in one prop. And13:04on their platform, you can trade up to13:0540 different accounts simultaneously for13:07a total of $1 million in simulated13:10capital. 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And like I14:29said, don't forget to use our promo code14:31that you'll see on the screen right now14:32for extra discounts at checkout. Thanks14:34again to Prop Shop Trader for14:35sponsoring. Now, back to the video.14:37Let's take a look at some other views14:38here. We have, for example, Euro Dollar14:40getting a bearish read. And this one's14:42actually looking like it wants to break14:43through the lows here. I thought we14:44might get a bit of a bounce here, and14:46maybe we did, but look how soft of a14:48bounce Euro Dollar gave us before14:49rolling over once more. If we do get a14:52retracement up into this 1.146014:56level or so uh then I am looking to14:58potentially fade the euro continuing15:00that uh bet that the euro dollar will15:02probably break through these lows in my15:04personal opinion uh until again trend15:06till the trend changes. I remember this15:08is just a side story. I remember like15:11gosh it must have been 9 years ago or15:14eight years ago I was really into15:17counter trend trading. I really liked15:20the idea of when everyone is sort of15:22following the trend to the downside, I15:24wanted to be the guy buying it. I15:26thought it was so cool to be counter15:27trend. And naturally, I think I was a15:30contrarian trader. Like naturally,15:33everyone sort of is like predisposed, I15:35think, to being more of a trend follower15:37or being more of a counter contrarian15:40trader. And I always wanted to be the15:43contrarian trader. Like some part of me15:45still finds it really attractive to be15:47like, "Oh, I really want to short this."15:48Because the idea of shorting the top or15:51buying the bottom feels so15:53psychologically cool to us as traders.15:56And I remember maybe eight or nine years15:59ago, I was watching someone that I16:01really liked. Um, in fact, I'll name16:04them. It was Top Dog Trading. He builds16:06or he still makes videos, I think. Top16:08Dog Trading. I don't know. He's like16:10pseudo retired, I believe. But anyways,16:12this gentleman was making a video16:13talking about a strategy that he used16:16and he recalled that like 10 years16:19before that when he was still figuring16:20out trading or getting started, he16:22started to realize that following the16:24trend just inevitably tended to work16:26better for him. And so here I am like16:29this is like uh inception for me like16:31eight years later I'm giving the same16:33rant. What I learned is that by16:36acknowledging, hey, you know what?16:37Fighting the trend is so hard and just16:40following the trend tends to work better16:42for me, I'm repeating what I heard in16:44that guy's video like eight years ago.16:46It's interesting how these lessons,16:48they're kind of timeless in markets.16:50Like trend following has been so much16:52more successful for me and ever since16:54adapting that in my in my methodologies,16:57right? Just follow price, follow trend,16:59follow the macro instead of trying to17:01predict it. It has been game-changing17:03for me. It's not magic money printing.17:05Nothing about this stuff is easy. But it17:07has certainly been the path of least17:09resistance to when I see a chart moving17:12like this, instead of trying to fight17:13it, I'm looking to join it. And that17:16change was huge for me. I think most17:18traders I don't actually I don't know.17:20Let me know in the comment section. Are17:21you more naturally do you want to fight17:24the trend? That was me like fully fully17:27committed to when I saw a big drop, I17:29wanted to buy that. when a big pop, I17:31wanted to short that. And um I don't17:33know what that is about the human brain.17:35Maybe we just don't want to be the one17:36to be the last buyer. But what I found17:38is I'd rather be the last buyer than try17:42and be the first buyer, right? Uh like17:44if I'm if if I'm trying to be the first17:46buyer here and then we just drop through17:48the floor, that is actually that's what17:51tends to happen more often than not for17:52for if when I'm trying to do that,17:54right? Counter trend trading. Now, I do17:56some counter trend stuff when I'm longer17:58term, like position trading or17:59investing, in which case it's really18:01small positions, and I am willing to18:04wait on an idea, but trying to fight the18:06trend, like I said, has just been more18:09painful than it has been productive for18:10me. Gold continues to get a bearish18:12reading here in my system. Uh, Russell18:14is also one that I wanted to briefly18:16mention. Russell and S&P 500. I heard18:18Allen on today's live stream talking a18:20lot about this one. So, let's pull up18:22the Russell. the Russell has been uh18:24looking really weak here. And again,18:26another example of a trend flip here18:28where we had this momentum, higher lows,18:29higher highs, has sort of fallen apart.18:31So, I do think that if you get a rally18:33in the Russell, I actually think that18:34that is more likely a short trade18:36opportunity in my view than a long one18:39at this time. S&P 500's getting a18:41bearish reading, but I don't like the18:42chart here. I'm not a fan of trying to18:43short this one. Again, too choppy, too18:46longer term, still uptrendy. Uh, you18:48know, take a look at your moving18:49averages. I would say if you start18:51losing something like the 200 day moving18:52average that starts to become more of a18:54bearish trend. Uh but for now not really18:57interested in trading this one18:58personally. Now with our filters up top19:00you can do all sorts of things. Like for19:01example let's say I just want to look19:02for stuff that looks really bearish19:05right from a macro perspective. I can19:07actually make this basically filter for19:09stuff that has a really good overall19:12macro consensus. Uh so for example you19:15can see my macro score is less than or19:17equal to minus3. And so these are charts19:20currently that have very bearish stories19:23largely contributed to by these three19:25categories. Economic growth data,19:28inflation data, and jobs market data.19:30We've added these filters here recently,19:31so if you're an EdgeFinder user,19:33definitely check them out. They can be19:34useful for finding ideas that more match19:37your specific style of what you're19:38looking for. For example, you can also19:40filter for technicals that you're19:42looking for. Or if you really care about19:43sentiment, you can isolate things that19:45have strong Coot data reports or, for19:48example, strong crowd sentiment,19:49contrarian readings. We're making this19:51thing over time more customizable19:53because we have all sorts of different19:54traders who use our stuff. Day traders,19:56swing traders, position traders who want19:58to be able to filter more decisively on20:00their own. So, that stuff has come into20:02EdgeFinder. And if you, like I said,20:04don't have a copy of it, check out the20:06link in the description down below.20:07Trading fundamentals can be a lot of20:09hard work, but we actually made a pretty20:12cool free Telegram channel where we are20:14publishing constantly updates on what is20:17going on from a macro fundamentals20:19perspective. And no, it's not AI. It's20:21not written by a robot. It's written by20:23a real person on our team. His name is20:25Allan. He puts together a report each20:27day on what is going on on things like20:28gold, currency pairs, commodities,20:31indices, etc. on a global financial20:33fundamental analysis basis. It's a20:36really cool newsletter where you can20:37basically stay on top of things by20:39reading for like a minute per day. If20:41that would be interesting to you to join20:43the free Telegram channel, there is a20:45link in the description down below on20:46this video that you can join and get20:49into the action there. We also offer20:51special discount perks for our products20:53as well as for funded accounts and for20:56brokerages, etc. And we also do some20:59giveaways as well. So definitely take a21:01second to join the Telegram channel in21:03the description down below. I also want21:04to take a second to just genuinely thank21:06you for supporting my content here. Make21:08sure to subscribe and hit the thumbs up21:10button if you have not already. And I do21:12hope that more videos in the future will21:14continue to help you on your trading21:15journey. Good luck. Thanks for watching.
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