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Update for Gold Traders
by Chris Vermeulen
I thought that I would send out a
quick update on the gold sector to show where prices stand from a technical
point of view for those of your wondering what to do with today’s sell off.
Monthly Gold Bugs Index – Gold
This chart clearly shows that gold
stocks are at levels, which are creating resistance from previous highs and
lows. This chart looks bearish at first glance because of the resistance level,
it’s important to take into account the MACD and price performance indicators
below, which are still showing some solid upward momentum. Momentum is still up
on a monthly basis, so holding a core position is crucial for traders taking
some profits at these high levels.
HUI:Gold Ratio – Weekly Chart
This ratio shows the overall
performance of gold and gold stocks. When this chart is moving higher we tend to
see gold stocks out performing the price of gold bullion, which is bullish. This
week it has reached the first resistance zone and has started to find
resistance. We could see a 1-2 week pull back in the gold sector before we get
another leg higher, if we happen to be so lucky.
HUI Daily Chart – Gold Stocks
Gold stocks have been on the run,
performing much better than gold bullion in the recent rally. As you can see,
they have broken to the up side, but are now testing my support trend line. A
break below this line will most likely be the start of a much deeper pullback in
prices, which could last a couple weeks.
Current Gold Trade in GLD
GLD made a clean break providing me
with a low risk setup back in May. Today we took profits on half our position to
lock in a 7.1% gain. We continue to hold a core position with our Stop set at
$91.00 and it will continue to move higher with my support trend line.
TheGoldAndOilGuy Trading Conclusion:
GLD has been providing excellent
short term trades, just like this, time and time again. Many traders are using
the DGP 2x leveraged fund to really take advantage of the consistent trades.
Technical analysis can provide a
very simple way to trade the gold sector but the difficulty comes down to
following through with the plan and setups. These charts above, show exactly how
I trade and use my charts to generate a comfortable income from gold.
While I am bullish on gold in the
longer term, I am not afraid to lock in gains along the way and accumulate more
on a pullback, when there is another low risk entry point.
If you would like to receive my
trading reports please visit my website:
Vermeulen is Founder of the popular trading site
There he shares his highly successful, low-risk trading method. For 6 years
Chris has been a leader in teaching others to skillfully trade in gold, oil, and
silver in both bull and bear markets. Subscribers to his service depend on
Chris' uniquely consistent investment opportunities that carry exceptionally low
risk and high return. Reach Chris at: Chris [at] theGoldAndOilGuy [dot] com
This article is
intended solely for information purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor before
making any investment/trading decision. No responsibility can be accepted for
losses that may result as a consequence of trading on the basis of this