Another forex day nears its conclusion and the weekend is almost upon us. I hope that your trading account has fared well over the past four and a half sessions, highlighted by an abundance of green pips.

No doubt about it, active trading is an all-consuming endeavor. Be sure to take some time over the next 48 hours to recharge the battery for next week’s action.

Economic Calendar

The economic calendar for this Saturday and Sunday is wide open, with the only upcoming event worthy of note being China’s House Price Index.

In an earlier update, I discussed the importance of real estate in the U.S. and how the metrics can shed some light on the current lending environment. Without a doubt, Chinese housing metrics can be used in much the same manner. Insights into the international lending environment as well as China’s economic prowess can very instructive in identifying upcoming trends in any number of asset classes.

Gold-Breakout And Technical Outlook

After prolonged sideways trading, gold has finally broken out with a vengeance. Friday’s session for December gold futures has produced a gain of over 180 ticks.

December Gold Futures, Daily Chart

As of this writing, gold is pushing intraday highs trading around 1296.0. The bulls are in firm control, bringing several topside resistance levels into play:

• Resistance(1): 78% retracement of current wave, 1298.6

• Resistance(2): Big round number, 1300.0

• Resistance(3): October’s high, 1308.4

Each of these areas will bolster participation as the market will seem to be overbought. The only questions are how to trade them and will they hold?

Bottom Line: I am not a big fan of fading extremely hot markets this close to the weekend. Sunday’s open may provide a big surprise in relation to today's giant range. Simply put, all of the good longs are gone, and the short locations are risky.

Aside from tight scalps from the resistance levels, I do not see carrying any short positions into Friday’s close being a good idea. But, any strategy can work given the proper plan and risk/reward alignment.

Sunday’s open will be very important. If price continues to rally from here, there will be many opportunities to go short from topside resistance and capitalize upon a retracement in pricing.

Until then, be sure to trade smart and for next week!