2009-05-26

Gold is really getting interesting

GOLD (GCZ9)

Buy on dips, possibly all the way to 880 if required. Stop below 860 (or 800 if conservative). Target 1500 + on convincing break above 1000

In Jan 2009 I wrote about Gold chart making an interseting formation "Gold is getting interesting". After recent up and down, Gold chart has become really interesting from several perspectives. 

A) Gold will breach tripple top at 990 area if the up move continues. That is really bullish and can propell Gold to new highs. The good news is that no one is talking about it (news papers etc) as they seem to have given up on precious metals in light of recent stock market rally. So it can take some people by surprise.

B) Gold has also consolidated in an inverted head and shoulder pattern since March 2008. That consolidation is about to be completed and possible breakout is on upside.

C) on Elliot Wave perspective as well, Gold looks bullish. The correction pattern since first achieving 1030 high calls for the top to be wave 3, leaving final wave 5 in formation on long term charts. The fib extensions for the 1-3-5 wave and I of 5, III of 5 and V of 5 wave conincide around 1502 - 1540 area.

This setup interesting long term and medium term trading perspective for gold, one worth watching. The trade setups I mentioned in this post require larger stops and therefore good only for managing existing long positions OR with deeper accounts. However buying dips and trailing stops from key support areas on chart should also work on micro managed positions. It could also be worth taking position in longer dated futures (and waiting for price to reach your key points) and certain longer dated optiond around 1500 are still cheap, especially 1000 - 1500 - 2000 butterflies which give potential upside of 500 points.

1 comment:

  1. I have come out of my Futures positions at 954 today leaving only long dated option positions. There will be opportunity to build up the position again on pull-back.

    ReplyDelete

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-VS