Premium Market Wrap 09.12.13

On September 11 I wrote, “if Gold gets a breakout from the current range, look for price to not only trade a range that equals its average of 26 points, but also to exceed it by about 25%, which is 32.5 points…a downside push through 1356 has a 100% weekly bear target at 1341.90.”

What a move in Gold! And we were all over it. Gold futures got a downside break through the low of Wednesday’s narrow range day at 1356, reaching a bottom at 1320.60. This 35 point sell-off was worth $3500 per contract traded, which is a 35% gain on margin.

This is another great reason to use Average Daily Range in your trading. This setup was nothing more than a simple low range day that led to expansion in the upcoming session — and it paid off big time. As a matter of fact, this pattern played out just two days ago.

Given that today’s range was so big, look for a smaller range for tomorrow’s market, likely between 1320 and 1340.