This week a short-term Commitment of Traders pattern arose in Wheat suggesting an up move might begin soon. The appearance of this COT setup coincides with the beginning of a bullish seasonal period (blue line, courtesy of Larry Williams). We can also see that the market is very-well accumulated as indicated by the On Balance Volume (green line).
Now to the price action.
On Monday the price broke below the previous bottom (495 4/8 from March 16) and immediately came back up. Held for one day, inside day on Tuesday, then jumped. That's bullish. Now we are looking for the creation of a higher short-term low and a price action signal there.
Currently, the last candlestick is a 2xN suggesting a move up but what I don't like is that so far the correction is only one day. For a good price action signal, I prefer seeing at least one more down day or an inside. Anyway, if I see a good price action signal I'll take it.
I'll be looking for opportunities to be long in Gold.
We are approaching a seasonally bullish period (blue line) and there is a divergence between On Balance Volume (green line) and the price, a sign of accumulation.
From a price action perspective, the last is an inside LB. Breaking above its high will be a signal but not that strong. I prefer to see a complex signal here, a few more candlesticks or at least a price action catalyst to strengthen the signal.
I continue to be bullish. Last week ended with a stop-loss run that cleared some of the longs (including mine). That day took out the prior low and then went immediately up to create a 1xT shape.
Breaking above Friday's high will be bullish and in ~67% will lead to an up day on Monday. However, this week I expect Monday to take the form of a small candlestick. It will most likely break the prior high but won't be able to break above the distribution zone. The shape of this candlestick will give more clues about when to expect the signal. For the bullish idea, the best-case scenario would be if on Monday the price doesn't break below the low of the 0T. If that happens I expect the bulls to lose momentum.
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Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer
Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com
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