Transcription
Yesterday, I posted about a gold short position, uh, or a new one, I should say. I rode this move here from down to here and then ended up getting taken out of the trade right here. Decided to reenter right here. And while it initially moved in my favor, you can see clearly now gold has decided to persist to the upside, stopping me out of this position for a controlled, small loss.
Now, why do I say that? If you have been recalling and watching my videos recently, then you'll know that I also mentioned talking about taking this position with a smaller size because I recognized that this was a bit of an aggressive entry. Now, would I still take this exact same trade if it's set up again? Yes. I'll explain why in today's video. I am still bearish on gold and why, while this is no fun to get stopped out of a position, I'm actually perfectly okay with it because I think that there are some better swing trade sell setups ahead.
In today's video, I'll be giving you a technical and macro breakdown in terms of what's going on with gold specifically. We'll also take a look at the dollar and some stock indices to build a logical trade plan around what could take place next week. Now, first and foremost, today is the 3rd of July, but we are celebrating here in the United States the 4th of July holiday a day early. So, markets are closed. So, in the meantime, let's take a technical analysis view of gold first and foremost. So, like I said, I am out of the gold short position. So, let's start a little fresh here.
Now, if you've been watching my videos here recently, then I've highlighted a couple key levels that I was thinking could potentially hold on the sell side. Now, again, we'll take a look at a macro perspective and an options flow perspective in just a moment. So, stay tuned with me on that. But, let's start technicals. We did break through this level of what was holding as resistance. And again, I say I would take this trade over and over because I would. This setup here, this retest of a resistance point in a very strong downtrend has many times played out in the right direction. However, in this particular example, it did not work out. We've based out here. We were in consolidation, but by default, when we're consolidating in a downtrend, my perspective, as long as the macro still looks bearish, is to stay with the bearish trend. That said, it didn't work out this time. But should we change our entire strategy next time around just because it didn't work out in this singular instance? No. You should stick to whatever works for you.
Someone commented on my video yesterday. They said, "Nick, you're obsessed with the gold short idea." And I'm not in any way obsessed with it per se. I'm just sticking to the rule set that I've traded for a long time. I have a pretty mechanical approach to markets and I take setups regardless of how that one particular trade works out. It's all about the big picture. Do you make more than you lose? You cannot avoid losing trades, but can you make more on your overall net wins than you do in your losses? That is the real question.
So, let's take a look at a couple levels that I'm watching. So, if I look left, clearly we had this little, uh, move here. I actually had trailed my stop loss when I was in this short position. I trailed my stop loss behind this level when we crashed through the lows. This was a clear level from the bears previously. And that level happens to be the round number $4,200 an ounce. And so as we come up into this area again, this time with a little bit of more, you know, a little bit more pressure from the bulls, do we get some kind of similar reaction? Should the bulls be looking to take profits here? Should the bears be looking to reload here? Well, I'll give you my case on why I do think that this level could hold as resistance, as well as one additional level which you can see here, the 4350 level, which I also think could be worth taking a look at for another swing sell setup.
Now, again, I rode this move from here to here. And when we look at it on the 4-hour chart, what I really liked about this was that you had a little bit of, you know, bullish optimism coming into the picture, which produced a really nice risk-reward sellside bet. That's why I said that this entry was a little bit more aggressive. There wasn't much for the bulls to grab on to at that time. It was still early in this move. And so, if it was going to roll over, it would be a very, very brief pullback. We didn't quite get that. In fact, the bulls are now getting a little bit more optimistic. I want to show you because I have the options data to prove it.
What you're looking at is the daily net options volume flow specifically for gold. And what I want you to notice is that notice how volume in the options world. Now, even if you don't trade puts and calls or options in general, this is an incredibly powerful sentiment tool that we just added to EdgeFinder. So, crowd sentiment was getting really bearish, like really, really bearish to the lowest point that we had seen in quite some time. Volume on the put side was getting nailed for, you know, a while there. And if you've been watching the videos, then you know that we actually pointed that out. We said, "Hey, this actually could be cause for a potential short-term reversal."
Now, I would be lying if I said this rally has been a little bit more strong than I expected. But look at the options flow. We're now flipping back into the territory where bulls might actually be starting to get tired here. Notice how volume has drastically increased to the upside. Suddenly, call volume is getting hit really hard, and it seems like the popular crowd is chasing gold higher now. So I use this as a contrarian indicator, uh, as well as a reversal signal. When this thing goes blue to red or it goes red to blue, you know, we typically will look at that as a momentum breakout kind of forming. So I do think that the bulls have had their breakout and now we start getting into territories where, okay, are we starting to get stretched and potentially due for another reversal this time back down to the downside?
So, if I go back to my chart here, uh, again, I think that bullish sentiment is getting really loud again. And I, I'd be curious. Let me see if I have the data. I might have this data. We could go do a little bit of a study here back in mid-June when we previously had this pop. Let's take a look. Okay, so it's not so pronounced, but this little move here, this rally in sentiment actually coincided right around the top of this move, that 17th of June move right around here. You can see that's when we had the bounce in sentiment. Anyways, continuing on with our thought process here, crowd sentiment has clearly flipped more in the positive direction for gold. And as this gets more stretched, that presents, in my opinion, a better risk-reward profile for a possible short side continuation to fade that crowd sentiment getting optimistic. We use it as a contrarian signal when it gets really extreme one way or the other. This, in combination with, of course, our other metrics that we focus on within EdgeFinder, produces a possible scenario.
So, if I look at this, I actually think that on Monday, I may be looking at a possible short side continuation for gold. And I think that I can set up a decent risk-reward idea here. And if we actually get fancy here with our trend lines, check this out. You've got like a really interesting trend line level. Not that trend lines play a huge role in my technical analysis, but still, I do think it's worth mentioning periodically when you have something so obvious here. You have a really nice retest of a major resistance level, uh, as well as if we get our Fibonacci tool out, we can get fancy here. This is a 61.8% retracement zone right north of where we currently trade. So, if we come up to this 4,200, this is starting to look like a really sweet short setup for me on a technical analysis perspective. And we've also lined it up nicely with the sentiment because let's say we have a couple more days of upside in gold. This sentiment reading is probably going to get very, very bullish, which is a juicy opportunity in my personal opinion. Not financial advice. Never is in my videos. Please be careful. Trading is high risk. But it starts to become a more juicy risk-reward profile for me in my own trading. So I am looking for that opportunity and very well may take another stab on the short side, this time with probably a little bit more size than my previous attempt. I did really well on this move. I, of course, gave back a slight amount of my profits here. Although it was a very small loss, uh, but I'm willing to continue to try the short side as long as we get to the next component of this video, which is very, very important. Is the macro still intact for us? And we cannot understate how important this is because all of this technical analysis is pretty, right? We can create a pretty picture on the technical charts, but I will not take a trade if the macro fundamentals do not align with my theory.
So, here you are. I've got the technicals aligned for us, but let's take a quick look at some more sentiment studies as well as macro fundamental stories going on in markets right now. So, if I go over to, uh, asset scorecard here, I'm going to already have gold populated. Check this out. So, gold is still printing a bearish reading within this indicator. But what the heck does that mean? If you're newer to my videos, which by the way, we've had a lot of people joining the channel here recently. Thank you for being here. And I do hope that you'll consider subscribing if gold coverage, dollar coverage, stock market coverage is something that you're interested in. I do these videos every day for free. Uh, and I do hope and ask that if you are enjoying them, consider subscribing, hitting a thumbs up button, all the good YouTube stuff. Okay, so I'm bearish on EdgeFinder, uh, or I'm sorry, I'm bearish on gold because partially EdgeFinder's score is confirming the bearish bias that I have. Let me explain.
So, let's take a look at the fundamental macro for a second. Now, what does that mean? That sounds like jargon. It sounds like I'm trying to be smart. I promise this stuff is really not as complicated as it seems to be on the surface. Let's break this table down in a really simple to understand way. Economic growth. A stronger economy is stronger for the underlying currency. If GDP growth is strong, that's not so good for gold because it's strong for the dollar, right? Stronger dollar means less rate cuts. It means confidence in the currency. That takes down gold for a little bit, right? So, if we take a look at some of our metrics here, we're overall getting a bearish bias in the summary category because GDP growth beat expectations, services PMIs beat expectations, retail sales beat expectations. Now, on the flip side, uh, manufacturing PMIs missed expectations. That's good for gold. Gold likes when there's a little bit of sensitivity in the economy. Consumer confidence was worse than expected. That's good for gold. But we want to take in, in true fashion here, to sticking with the macro summary. We want to consider all of these things. We don't just want to look at one thing. This is a common fundamental analysis beginner mistake is to overvalue the report of one number. Like, for example, the non-farm payroll number that came out on Friday or, uh, yesterday, Thursday. Was it worse than expected? Absolutely. Was that a bullish catalyst for gold? Absolutely it was. Right. So you can see it's a bullish category. This automatically ranks that into our system and implements it into the macro score. However, is this enough to completely flip us bullish? Well, for this, we want to consider the full picture. And this is where most macro traders or fundamental traders get it wrong. They overvalue one thing. They don't look at the aggregate. On the EdgeFinder, this thing automates the whole aggregating the whole process component. It's looking at all the jobs statistics. It looks at inflation data and looks at economic growth data and it gives us a summary or a bias. Overall, minus four tells me that most of our metrics here are beating or missing in a certain way that aligns more favorably to gold bearishness in the here and now. EdgeFinder score has been bearish for quite some time. And I, it will, of course, change back the other way. If you've been an EdgeFinder user for a while, you know that in 2023 through 2025, EdgeFinder was pretty much exclusively bullish on gold. That had no bearish readings for like two years straight, and that is because the macro aligned in such a way. But now the macro generally favors gold bearishness, which has been a phenomenal call for the majority of 2026. Now, with this in tandem, I use that in combination with my analysis to say, well, if we get a technical setup, I like this setup a lot more because I have the macro on my side here, at least with EdgeFinder's summary of it. Nothing about EdgeFinder is a magic crystal ball. This thing is not a, you know, it's not going to instantly make you money. I don't want to make any sort of, uh, false pretenses or promises like that. This software is a screener. It helps to build insights in your trading. If you are somebody who is interested in macro fundamentals and if you do not have EdgeFinder already, now is the chance to take advantage of our summer sale and get 40% off the tool. This product makes fundamental analysis way simpler to understand and implement. For even people who are more mildly beginner at fundamental analysis, let alone people who are a little bit experienced in this, who just need the right tools. This thing levels the playing field for bringing fundamental analysis to the average everyday retail trader, which is exactly why we built it and why we're in business. So, take advantage. Take advantage of the code that you see on the screen right now. That code is YTVIP. There's a link in the description down below to where you can get access to the tool and explore all of its features on our website. Alternatively, you can head over to our website a1trading.com. When you hit the homepage, just go here under advanced market scanners. There's tutorials. You can get access. You can also explore other products and things that we have on the site if you are interested in doing so.
Now, let's continue our analysis by taking a look at the DXY. We do this every day on the channel because if you're going to trade gold or indices, I think at the core of it is keeping a close eye on what's happening in the dollar. We cannot underestimate how important understanding the strength of the dollar or weakness of the dollar is when interpreting where gold may be going next. So, when we take a look at a technical analysis perspective of the dollar, first and foremost, we have past resistance that is getting close to being retested. This 100.5 level, uh, is a huge line in the sand in my personal opinion here for the dollar. Now, we have one smaller, more minor level around the 100 on the dot level. So what I'm looking for in the DXY is I generally remain bullish right now on the dollar index. Uh, and I'm looking to see if that bias is correct by getting some kind of a response from a technical analysis perspective around this current level. So, let's watch this in the coming days because I think that if you're watching DXY and you see strength coming in after a normal pullback, I know that in the last few days, if you're looking at like the 15-minute chart, you're like, "Oh my gosh, the dollar is collapsing." But slow your roll for just a second. Look at the daily chart and understand we are still in a very solid overall upward trend. And if anything, I mean, notice how we're just mildly testing the 20-period simple moving average, right? We have not done massive structural damage on the daily chart. And so for the time being, as this thing pulls back, I think that we have to look at it as innocent until proven guilty. So if you get something more disastrous happening for the dollar, like, for example, my, my interpretation of quote unquote disastrous would be if you start to lose the 100 round number, if we're back below 100, uh, and sellers are coming in on every rally, then we have a different story on our hands. But right now, again, without hindsight in our favor, we're just trading what we see right now. We can't predict the future perfectly. When I look at this, I look at this and I say most likely, I think we hold these areas, not just because the technical chart does look good, but also because the macro looks good as well.
Let's take a look at the dollar index by pulling up US dollar on EdgeFinder's asset scorecard to build a bias here. So, EdgeFinder's got a plus seven overall reading. And when we take a look at the fundamental score, it's noticeably flipped exactly with what gold got, which was a minus four. Now, of course, bullish overall economic growth, bullish on inflation, bullish jobs market data. This summarizes pretty much everything. I don't want to repeat everything that I just did with gold. So, let's take that as it is and continue on. The macro looks good. We're confirming our bias there with EdgeFinder. Overall technical score, technical reading looks good because you've got that nice tandem moving average. You can also draw a bit of a channel here right to the upside. So, just inversely to kind of, uh, the Euro dollar, which is this downward channel. We have the dollar index, uh, moving higher. Now, we'll take a look at EU and we'll look at some other currency pairs in just a moment. So, stay tuned with me on that, uh, for the forex people. I know they've been waiting for some forex pairs. We'll take a look at some if you stick around with me here. So, again, a retest of past resistance turn support. I'm looking for a response from this area. And that is, in my opinion, the path of least resistance for the dollar index is a move up and over that 102 level, so long as we continue to see outsized or outperforming economic metrics, uh, especially compared to, uh, counterparts like the European Union, etc.
So, let's take a look now at, uh, some individual currency pairs quickly. So, I do like Euro dollar. Been talking about this on a bounce up into the 1.15 level as a possible sellside continuation play. I am looking for that move to take place and I do have to say carefully though, because I believe I'm not sure where Euro dollar is on on readings. Yeah, it's getting a neutral reading right now. So, while that could, you can see we've been super bearish on Euro dollar for the last few weeks, at least in EdgeFinder's scoring, we've ticked back into neutral territory. So, I'm going to watch this one close. We have lost a little bit of our synergy here and so I'm going to keep an eye on it. Uh, but let's see if there's any other dollar pairs that look interesting. So, if I just type in USD really quick to our screener, pretty much everything is going to be in neutral territory for now. We can also see this in the top setups page, uh, which of course gives us an overview of all of the assets that are tracked by EdgeFinder here. So, if I go USD and we take a look at just the currency pairs, you can see the same thing. Everything is in neutral territory. So, we're on watch. We are closer to bearish setups for some of the euro, you know, for example, Euro dollar, Kiwi dollar, etc. Um, but we're very much just keeping a close eye on some individual currency pairs from a technical analysis perspective for the time being. So, if Euro dollar rallies up into this area, I generally am a seller. However, I need confirmation from EdgeFinder, otherwise I will not be taking any trades on this. Pound dollar, um, broke through on Thursday, uh, this level that we had been watching, this 1.3325 level, which we've talked about every day on the channel. So I am curious to see if this thing wants to head on up to 1.3450. I think it's possible and, uh, again, I'm not really interested in taking any aggressive sells here because my score overall is neutral. Dollar Yen retesting here a little bit after the huge drop that we saw yesterday. We are seeing a little bit of a bounce on the Dollar Yen. Dollar Yen's going to be neutral for me as well, but I'm watching very close to see how this 160.2 or three, uh, level holds, if it does hold in fact as support. Seems like we've already kind of tested into this area here. You could see very minor, uh, you know, touch of that area before already rebounding. So, let's see if that can follow through to the upside in today's trading action.
Let's also take a quick look at what's going on with the S&P 500. So, stocks have been higher, um, which has been, well, I, I should say this, stocks have been lower for tech stocks and higher for a lot of other sectors, which is maybe a little bit of a welcomed rotation in terms of the stock market. I think you have a couple key levels here. We won't take too much time on this because, uh, right now I'm thinking that this is pretty standard. You know, you're just in consolidation for S&P. What I'm looking for here on the S&P 500 is either a breakout above 7600, in which case I think the bulls are in full control, or a pullback into the 7350 or 7200 level. These areas look like potential buy the dip opportunities to me. Um, however, I think EdgeFinder is a little bit neutral on this one as well in the here and now. Let me just take a look here. I'm going to reset my search bar in top setups. This will, this is a quick way by the way to scan a lot of markets really quick is the top setups indicator. So if I take a look at indices, just really quick, you can see that the Dow Jones is getting a bullish reading, but S&P, Russell, China, these are getting neutral, and the NASDAQ is also neutral, but actually closer to a bearish setup. The one-day change here really dropping off, perhaps technicals losing a little bit of steam here on the NASDAQ, at least at the time of recording.
So, let's also look really quick at the DAX, UK 100. So, if I look really quick, uh, we'll just do our Dow Jones analysis. I do like this one to the upside. Would probably need a pullback into the 51,600 level. That looks like a clean continuation play. Let's also look at the DAX or German 40. Looks really strong. Look at this hitting all-time highs here as we speak. And as we look at this, you can see that past resistance point now coming in as potential support. So, depending on how aggressive some of you guys are looking at the DAX, one level to watch for would be potentially getting down into your, let me fix my 4-hour chart here. Uh, possibly looking at this previous area here as a major level of past resistance turn support. It also happens to line up really nicely with the 61.8% retracement. Uh, now you also have a little bit more all-time high here. So I like both of these levels. Bit more aggressive is the 38.2% retracement, but on a 4-hour chart perspective, this thing looks really strong. So perhaps the DAX is due for some continuation plays. I do tend to like that to the upside in the here and now, especially with EdgeFinder confirmation giving us that plus six reading.
Let's also look at the Footsie. So this is the, the UK stock market. Really strong push to the upside here recently for this one as well. Looking at the daily chart, this one is still yet to hit all-time highs. You are tagging some pretty major resistance here. So, I think you have a couple scenarios that might be worth. Let me fix that. Hold on. Let me go here. Template supply. By the way, if you're, I know somebody just watched that and they're like, "Whoa, how'd you do that?" Go under templates in TradingView and you can save as something and then reuse it over and over. So, anyways, um, I'm looking at this and I'm saying, "Okay, you've got resistance overhead." I think if you're watching the Footsie, you have, uh, bullish demand down here and you have bearish demand, or I'm sorry, bearish supply overhead here. So, when I'm looking at this, I think with the Footsie, you're in this longer-term, uh, UK 100 range. If you get this type of move, these price action points look constructive. And with EdgeFinder confirmation, I do like these to the upside as a path of least resistance, kind of respecting the longer-term uptrend that we've been in in some of these indices. So, that is going to be that.
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So, with that said, let's see anything else. NASDAQ again, kind of bouncing back today. Again, US markets are closed, so this is sort of happening on thin volume. I wouldn't read too far into this, but I do think that what's interesting is the AI jitters that are sort of taking place right now in markets. This selloff here that we're recently seeing is actually very heavily concentrated in the semiconductors and technology sector. Now, why is that interesting? Well, semiconductors, we've talked about being the leader in this market, the, uh, the leader of the revolution, if you will, when it comes to AI, uh, with with memory chips and and, you know, semiconductors in general like Nvidia, AMD, Qualcomm, uh, Micron, all these different names, just high flyers, but they also can fall just as quickly. And the SMH in just a couple trading days lost 1.13% of its value. And there is a very distinct possibility that if uncertainty about capex spending, etc., becomes a bigger problem, uh, any little bad story here could send this thing down 20 to 30% very quickly. So I do think semiconductors are due for a pullback. I'm not short semiconductors. However, if I get that type of move, I start to look attractive at a possible buy the dip opportunity, as I do love the momentum here. I just think that it's become a bit stretched. Looking at semiconductors, if we are looking at the 38.2 to 50% retracement, I think that there may be a trade here that I'm interested in taking. But ultimately, I would want to put a stop on this idea because if this thing comes down and fails to hold support, I do not want to get caught holding the bag on semiconductors because historically the crashes in semiconductors can be very violent. Here's an example in January where they dropped 37%. Or just before that, the summer of 2024, we saw a 30% drop. Or if we take a look at 2022's drop, you had a 47% drop. So semiconductors are very volatile and while they look invincible on the way up, they can also crash very violently on the way down. So I am keeping an eye on this.
Another ETF is XLK. This is the technology sector ETF. This has also been not a great performer. Down 9% off of its highs. And again, I think that if you start losing some critical levels of support here, which I'm going to add actually to my chart here, we have a really critical level of support being tested right around current levels with XLK. If you start to lose this from a technical chartist perspective, that looks a little bit, uh, toppy. So, going to keep an eye on it. I think that if you're bullish on tech, like very bullish, because I think that there are, you know, there's a lot of hype built into this. Um, maybe this area is a spot to watch for a continuation play. Uh, but I do think that there's a very distinct possibility that a normal healthy correction is due for some of these names and you could very well see the 38 or even the 50 or 61.8% retracement come into contact very quickly if this thing wants to reset a little bit before, uh, what I believe is ultimately a potential move higher following that. That's my opinion on tech for the time being. I'm not touching it because I do think it is due for a little bit more of a correction, a little bit more of a pullback, but we'll keep a close eye on it.
Thank you for watching. Hope this video was helpful to you. Trade safe. Have a nice long weekend if you're in the US. And for my friends outside of the US, have a great weekend ahead. Thank you so much for watching and we'll see you in the next.