===================================================
GOLD CURRENT TRADE
(For Spot Use Two dollars Lower)
===================================================
Bgt 1 April Mini Gold at 1669.10 on 2/5/13
Use 1656.50 as a stop loss
TARGET
SELL 1 April Mini Gold at 1695
If we close above 1705 we’ll look at re-entering but wait for an update.
==================================================
SILVER CURRENT TRADE
==================================================
Buy 1 March mini Silver at 30.75 on (order still open)
Use 29.40 as stop
==================================================
COMMENTARY
Gold and the Edge of the Wedge
Gold continues trading in wild and erratic price swings but knowing the intricacy and dynamics of a price wedge tells us this is normal price action. The wedge is where the demand/supply forces of the bull/bear battle is taking place. The more erratic the swings the more powerful and important it is to the next intermediate/medium term price trend. The last week has a very tight range and the swings are more erratic. On Tuesday the Asia trade went from 1672 to 1678. By the time London opened price went to 1672 and then to 1683 and back to 1674 (where the day had started). New York went from 1672 to 1686 then back down to 1667 and ended at 1674. Thus each exchange went thru the swings and at the end of the day price was basically unchanged at the end of the day. I’ve drawn the lower channel line as close to the May lows as possible because one of the potentials we have to be aware of is that there is that the possibility for price to form a fake line and then penetrate it could set off a sell by chart watchers. In fact, price could penetrate one of these lines and reverse in a fake out move. For instance if we broke below 1647-1651 it could set off a sell scenario to 1625. We can’t rule that out.
The 5th of the Month
The next short term cycle is due to begin on Feb10th (plus or minus 72 hours). Thus by February 7th the “window” will open and will remain open until Wednesday of next week. From there the next two week trend should develop. I want to bring your attention to a 30 day cycle that has shown up that involves the 5th day of the month. The above chart shows the market turns since the HIGH of the year on October 5th. Note we had a low on November 5th. December 5th produced a low but that was one case that it only lasted a week. January 4th (one day from the 5th) produced the yearly low and the lowest price in the last 5 months since the breakout in August.
Now we arrive at February 5th. If this cycle plays out we’re either making the high for the month or we are about to begin an upswing. Since 3 of the last 4 signals have moved higher after the 5th it’s very possible to do so again. However we won’t kid ourselves either. Gold is very capable of turning down here. Is just that when we weigh the evidence of bull and bear that the bottom line is that we can go either direction here.
What about choppy and overlapping?
THE PRICE PATTERN IS CHOPPY AND OVERLAPPING.
While the odds favor the chop to turn down, they are not as reliable at key turning points. The best example of that is if you go back and look at the May/June choppy pattern on the chart above. In that situation price turned up and hard for what was really the only good rally of 2102. That doesn’t mean this one will, but he have to be aware of the potential. So while the odds favor the downside on choppy and overlap, they are only odds and not absolutes.
Bullish Case
The bullish case is that the FED meetings, the NFP report and options expiration is behind us and the Chinese New Year begins next week. That has been a bullish seasonal for gold in the past and the last 4 years has been positive for February. At the same time bearish sentiment is at its lowest in quite a while and open interest in gold has been drastically reduced.
Bearish Case
Price does remain in a downtrend and the CHOPPY AND OVERLAP pattern doesn’t usually favor higher prices.
Thus there is no doubt that there is some risk involved but there always is in trading. For me, I am willing to risk 15 dollars per ounce on this trade. I clearly don’t like the chop and overlap but it is not a guarantee of lower prices and there are a lot of bullish factors at the moment. There are going to be times when we are going to be stopped out and that just comes with the business of trading. But we have to take chances at times if we’re going to have good gain potential. NORMALLY I would not take a position with a choppy and overlap condition on the chart. But there is a lot of things that are bullish also.
SHOULD WE REALLY BE GOING SHORT HERE AND NOT LONG?
IF the MEDIUM TERM trend goes to a bearish mode then I will entertain taking short positions a lot more as part of the trading strategy. However, to answer the question above, it is certainly possible that this could turn out to be a warranted short position. I have been reluctant to short gold because of the bullish over tones and we’re in a bull market. Like I said if we fail at this juncture I will begin to entertain that on a much more regular basis.
If the upside is chosen then the chop will go away and price should accelerate higher. It’s the same for the downside. If the downside becomes in play, then price should accelerate lower. NOTE HOW CHAOTIC the pattern has become as we get to decision time.
Hourly Chart
Whenever we get into a wedge pattern the situation is uncertain. There’s a myriad of support points below the market but a wedge can render them quickly, that there is no doubt. The choppy and overlap condition can certainly turn down here. There is a bull and bear case that can be made for both sides. There will always be losses in trading as risk is always there. In this case, if all the bullish factors we listed does not play out and prices turn down then we’ll get stopped out and have to re-group.
If you feel uneasy about the trade, and can’t afford to take a 15 dollar per ounce hit, now is the time to exit while we are above 1669. If we do fail here, prices could certainly take a hit and the medium term trends can turn down. If you bought more than one contract, getting rid of one at either 1680 or 1695 and letting the other one run with a breakeven stop would be a good tactic. If we do selloff the potential to go to any of these support areas will be in play. Also, another hard selloff might be enough to turn the medium term trend down. We can’t eliminate that potential either.
The chart below shows the character of the bull market since it began. You’ll note that all the other corrections have the same look as where we currently are. Thus this area seems to be an important point. If we turn down here and get below 1570-1600 then the correction could last longer and it would open the door again to 1400-1530.
As far as time and price and the “look” of the market is suggesting if gold hasn’t turned bearish and the uptrend is still intact then we should be close or at the point where gold has turned up in the past. Now it’s up to gold.
INVATA SA TRANZACTIONEZI GRATIS PIPSI IN FOREX
===================================================
GOLD CURRENT TRADE
(For Spot Use Two dollars Lower)
===================================================
Bgt 1 April Mini Gold at 1669.10 on 2/5/13
Use 1656.50 as a stop loss
TARGET
SELL 1 April Mini Gold at 1695
If we close above 1705 we’ll look at re-entering but wait for an update.
==================================================
SILVER CURRENT TRADE
==================================================
Buy 1 March mini Silver at 30.75 on (order still open)
Use 29.40 as stop
==================================================
COMMENTARYGOLD CURRENT TRADE
(For Spot Use Two dollars Lower)
===================================================
Bgt 1 April Mini Gold at 1669.10 on 2/5/13
Use 1656.50 as a stop loss
TARGET
SELL 1 April Mini Gold at 1695
If we close above 1705 we’ll look at re-entering but wait for an update.
==================================================
SILVER CURRENT TRADE
==================================================
Buy 1 March mini Silver at 30.75 on (order still open)
Use 29.40 as stop
==================================================
Gold and the Edge of the Wedge
Gold continues trading in wild and erratic price swings but knowing the intricacy and dynamics of a price wedge tells us this is normal price action. The wedge is where the demand/supply forces of the bull/bear battle is taking place. The more erratic the swings the more powerful and important it is to the next intermediate/medium term price trend. The last week has a very tight range and the swings are more erratic. On Tuesday the Asia trade went from 1672 to 1678. By the time London opened price went to 1672 and then to 1683 and back to 1674 (where the day had started). New York went from 1672 to 1686 then back down to 1667 and ended at 1674. Thus each exchange went thru the swings and at the end of the day price was basically unchanged at the end of the day. I’ve drawn the lower channel line as close to the May lows as possible because one of the potentials we have to be aware of is that there is that the possibility for price to form a fake line and then penetrate it could set off a sell by chart watchers. In fact, price could penetrate one of these lines and reverse in a fake out move. For instance if we broke below 1647-1651 it could set off a sell scenario to 1625. We can’t rule that out.
The next short term cycle is due to begin on Feb10th (plus or minus 72 hours). Thus by February 7th the “window” will open and will remain open until Wednesday of next week. From there the next two week trend should develop. I want to bring your attention to a 30 day cycle that has shown up that involves the 5th day of the month. The above chart shows the market turns since the HIGH of the year on October 5th. Note we had a low on November 5th. December 5th produced a low but that was one case that it only lasted a week. January 4th (one day from the 5th) produced the yearly low and the lowest price in the last 5 months since the breakout in August.
Now we arrive at February 5th. If this cycle plays out we’re either making the high for the month or we are about to begin an upswing. Since 3 of the last 4 signals have moved higher after the 5th it’s very possible to do so again. However we won’t kid ourselves either. Gold is very capable of turning down here. Is just that when we weigh the evidence of bull and bear that the bottom line is that we can go either direction here.
What about choppy and overlapping?THE PRICE PATTERN IS CHOPPY AND OVERLAPPING.
While the odds favor the chop to turn down, they are not as reliable at key turning points. The best example of that is if you go back and look at the May/June choppy pattern on the chart above. In that situation price turned up and hard for what was really the only good rally of 2102. That doesn’t mean this one will, but he have to be aware of the potential. So while the odds favor the downside on choppy and overlap, they are only odds and not absolutes.
The bullish case is that the FED meetings, the NFP report and options expiration is behind us and the Chinese New Year begins next week. That has been a bullish seasonal for gold in the past and the last 4 years has been positive for February. At the same time bearish sentiment is at its lowest in quite a while and open interest in gold has been drastically reduced.
Bearish Case
Price does remain in a downtrend and the CHOPPY AND OVERLAP pattern doesn’t usually favor higher prices.
Thus there is no doubt that there is some risk involved but there always is in trading. For me, I am willing to risk 15 dollars per ounce on this trade. I clearly don’t like the chop and overlap but it is not a guarantee of lower prices and there are a lot of bullish factors at the moment. There are going to be times when we are going to be stopped out and that just comes with the business of trading. But we have to take chances at times if we’re going to have good gain potential. NORMALLY I would not take a position with a choppy and overlap condition on the chart. But there is a lot of things that are bullish also.
IF the MEDIUM TERM trend goes to a bearish mode then I will entertain taking short positions a lot more as part of the trading strategy. However, to answer the question above, it is certainly possible that this could turn out to be a warranted short position. I have been reluctant to short gold because of the bullish over tones and we’re in a bull market. Like I said if we fail at this juncture I will begin to entertain that on a much more regular basis.
If the upside is chosen then the chop will go away and price should accelerate higher. It’s the same for the downside. If the downside becomes in play, then price should accelerate lower. NOTE HOW CHAOTIC the pattern has become as we get to decision time.
Whenever we get into a wedge pattern the situation is uncertain. There’s a myriad of support points below the market but a wedge can render them quickly, that there is no doubt. The choppy and overlap condition can certainly turn down here. There is a bull and bear case that can be made for both sides. There will always be losses in trading as risk is always there. In this case, if all the bullish factors we listed does not play out and prices turn down then we’ll get stopped out and have to re-group.
If you feel uneasy about the trade, and can’t afford to take a 15 dollar per ounce hit, now is the time to exit while we are above 1669. If we do fail here, prices could certainly take a hit and the medium term trends can turn down. If you bought more than one contract, getting rid of one at either 1680 or 1695 and letting the other one run with a breakeven stop would be a good tactic. If we do selloff the potential to go to any of these support areas will be in play. Also, another hard selloff might be enough to turn the medium term trend down. We can’t eliminate that potential either.
The chart below shows the character of the bull market since it began. You’ll note that all the other corrections have the same look as where we currently are. Thus this area seems to be an important point. If we turn down here and get below 1570-1600 then the correction could last longer and it would open the door again to 1400-1530.
As far as time and price and the “look” of the market is suggesting if gold hasn’t turned bearish and the uptrend is still intact then we should be close or at the point where gold has turned up in the past. Now it’s up to gold.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
