- New Science in old markets -

Copper and gold compress. Wheat update

Gold futures made a daily-scale compression on Friday that has yet to break either way, despite some early weakness today.

If you are convinced of the direction of the market for other reasons, by all means use the break of a compression to act as the trading trigger, but if not then please watch out for false breaks in compressed markets - it is often better to let a compression form, wait for the trend to start and then enter later, preferably on a re-test of the price area of the compression.  This reduces the risk of being caught in a false break and is described in our user guide under 'return movements'.

In the case of copper, there is both a good case for being bearish from a fundamental point of view (lots of supply arriving in the market after many years of investment) and now a downward break of a recent compression. Still, it is better to wait for a closing break of the compression to take action and US copper futures have several hours more trading until the close.

Wheat compressed three days ago but that compression did not yet break either way. Be careful. Here are the charts without any further comment:

Gold, Copp, Wht comps