Monday, March 10, 2014

Gold turns, once again | The debut of our new “Mandelbrot” software

Since the start of this month gold has twice attempted, and twice failed, to reach above the resistance in the 1350 area that was set for it last October. This, combined with the Non Farm Payrolls report from the US last Friday, which has beaten expectations and in the process confirmed, for the market at least, that softer figures for the preceding two readings were weather-related, and made the continuation of the tapering of Quantitative Easing a racing certainty, has created a case for now selling gold short that can only be described as compelling.

As can be seen, the price action here has also resulted in a double top, which is visible on the four hour chart above.

There are still clouds on the horizon, mainly in the form of the geopolitical tensions that are Ukraine and the Crimea region, but then the Forex situation is never absolute. We have set our software to go short gold when it determines a suitable entry point.

The debut of our new “Mandelbrot” software

We are always looking for new ways that algorithmic software can assist us in our endeavours in the Forex trading arena. For a little while now we have been working on a new routine, which we have named “Mandelbrot” in recognition of the work done, particularly in the area of fractals, by Benoit Mandelbrot.

On the 5th March last, which was Wednesday of last week, the Mandelbrot gave us a signal to enter the USDJPY pair on the long side (as a buy). At the time we ignored that signal on the grounds that the Non Farm payrolls report in the USA was imminent the following Friday and this diluted the odds of such a trade being successful, because a third poor reading of this measure would have played havoc with the markets.

We will now be acting on that signal and, once again, have set our software to take a long position in USDJPY when a suitable opportunity presents itself.

On the same basis, we have taken a short position in the Australian dollar against the Kiwi (AUDNZD). The Aussie against the US dollar (AUDUSD) is also in prospect.

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