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Gold & Oil Are At The
by Chris Vermeulen
Gold and oil traders have been on
edge for the past few weeks wondering if prices will drop or rally from this
correction/pause in prices. You will see in the charts below that gold and oil
are at points where they could go either way very quickly. The are currently
balancing at key technical points and we will wait for the tipping point.
The bullish percent index for gold
mining stocks helps point out how bullish the gold sector is. Currently gold
stocks look to be strong. This chart shows that we are near a possible wave top
and could see lower prices in the near future. The Problem with this indicator
is that it can hold these high levels for extended periods of time and gold
could just keep moving higher and higher.
So now what? Which way is the gold
Well Indicators are very helpful for
pointing out trends and possible pivot points; I do not believe you can trade
with them alone. In my opinion trading the price action of gold and gold stocks
is the way to do it. Until we get a bounce or breakout with a low risk setup its
best not to do anything.
Gold Stock Trading
Gold stocks are currently trading
near support. This week we should see a substantial move higher or lower. Only
time will tell.
Gold Price Trading
Gold has been consolidating for
about 6 weeks and has formed two patterns. One is a head and shoulder reversal
pattern and has broken its neck line already. The other is a simple A-B-C
correction which is what I have drawn on the chart.
Why did I only show the A-B-C
correction? Both patterns are simple to see so I only high lighted one pattern
which puts enough noise on the chart, I am all about keeping it simple.
I am favoring the long side
currently for gold. Donít get me wrong I am not bias in my trading, I am more
than happy to go short at any time, but for this report I want to stick with the
Trend Is Your Friend mentality.
Gold is currently trending up and
after rallies we get pauses or consolidations as traders take profits and new
traders start to accumulate long positions.
Gold miners Bullish Percent index
is a bullish.
Simple A-B-C consolidation
Gold is currently trading at
support from the December wave top.
Gold is currently trading at the
200 Moving average which can act support.
Gold stocks are holding more value
than the price of gold (bullish for gold).
Stochastic indicator is bottoming
and starting to hook up for positive momemtum.
Technically Trading Gold
Trading gold can be a very
frustrating experience. I will admit itís been much harder than normal, and the
past 6 months with volatility levels through the roof itís difficult for getting
low risk setups in both gold and gold stocks.
Knowing when to pull the trigger is
the most difficult part of trading and that is why you must have a strategy in
place which will minimize your risk per trade and your money is working for you
when the odds are on your side. I use a very simple trading model which only
generates 10-30 trades per year in gold. I believe you do not need to trade
every week to make a living from the markets.
Crude Oil Traders Be Ready!
Energy traders have been watching
this slow rounded bottom reversal forming for months in the energy sector and
crude oil prices. I have pointed it out many times and even posted some buy
signals for USO and Crude Oil a while back. Oil is now testing a key resistance
level and a breakout here could really send oil prices gushing higher towards
the $70 per barrel level.
Energy Bullish Percent index
Energy stocks have been bottoming
for about 5 months so most investors should be trading at about the breakeven
point here if they have been holding their positions. The BP chart below is
showing some bullish momentum as more energy stocks are on point and figure buy
signals now. This is a very bullish looking chart.
Crude Oil Traders
Not many times a trader gets to see
the amount of volatility we have seen in the recent months with crude oil. It
really is an eye opening experience and can provides huge profit potential if
one is to focus on trading this commodity.
This multi month cup and handle
pattern is very exciting to see. Not only is this one of the most powerful
bullish patterns but its in oil which I think is safe to say has almost every
trader and investor watching around the world. If we get a breakout here I
expect to see prices sky rocket higher toward the $70 level.
Oil Traders Be Ready
Trading oil does carry a lot more
risk than a lot of other investment vehicles but the profit potential in oil
looks great. We may see prices pause at this key resistance level as a lot of
traders will be taking profits and or shorting oil here.
But if oil does breakout, then this
could be the trade that sets you for the year. Those of you who went long on my
buy signal at the end of February are sitting with a nice profit and praying for
a big pop in oil prices.
Those of you who are not long energy
yet will have to decide what your risk level is. Entering on a breakout will
carry 10-20% downside risk. Or you could wait for a breakout and correction to
buy in. As usual I will wait for another low risk setup and provide it to my
members when the time is right.
Some funds to trade would be XLE Ė
Energy Stocks Fund, USO Ė Texas Oil Fund, XEG.TO Ė Canadian Energy Stocks Fund
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