Here is our update chart of Comex gold as of Friday's close. Notice the downtrend on the daily chart. As you will recall I had pointed out that the move up to that high was speculation.Now that some of the suckers have been cleared out, notice how the commercials are starting to shift back to the long side of this market (Green Line) in the bottom graph. They are not quite to the point where a long side entry is worth looking at, but this bears watching.
What I would suggest, is to keep an eye on this and when the commercials get more aggressively long, look for a breakout to the upside. Due to the significant downtrend here, at the very least I would wait for that trendline to be broken.
For those of you that are longer term players in this, you may want to try and catch the falling knife. I advise against that, but if you think the price is going to $1000 like some do, there is no need to be picky over this technical setup. This setup is geared to create a favorable situation for an immediate profitable move.
4 comments:
Another great chart. Even though I am one of those to whom you refer ($1000 gold), I still want to time my entry near the bottom. I will watch this daily, and when it bottoms out, make my move.
I'm still a little leery of gold though. I remember how low it got in the 80's. Could this happen again?
Yes it is possible. If you look at a chart of Gold compared to Crude Oil there is quite a bit of difference.
Crude has much more of a base to launch from, where gold has alot of air underneath. I would just suggest defining your time frame, and what levels in price you forecast.
Once you have done that, establish a plan and execute it. The problem with investing on big picture fundamentals, is timing the entries and exits. That was my purpose in showing some of these charts.
Gold may go way up, but it is a little bit more difficult than just blindly buying it anywhere. Just get your plan, stick to it, and live with the results. That is what I do as a trader every day.
Chris, I remember you wrote that the commercials were long the USDollar. Today, the dollar fell, based on new reports out this morning about the new Treasury Secretary and a report of lower consumer confidence. Perhaps Iran and fear of oil disruptions played a part. I guess even the commercials can be wrong.
Lareg commercial could care less about one single day in the markets. You cannot judge commercial activity on a daily basis, they move in and out in large chunks. They take positions for large moves.
That market is in a down trend, so what a trader should do is exit a short based on this. Then on any rally, if commercials get short on it, re-enter on the short side.
Remember, I keep stressing this. It is a tool. If it is of no value, then do not use it. It happens to serve me very well.
I am covering this in the newsletter this month which will be out this week. Also, remember, what you are referencing, is what the media says is causing the drop. Rarely, are they right about what causes moves in the markets.
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