UPDATE: Gold's double bottom - A medium term view
In my last two gold trades, I took advantage of support and trendline patterns while having a bullish view on gold as a way to play what I believed to be an inflationary environment. While both trades (see here and here) worked quite well, gold has spent the past few weeks languishing after a swift move lower. Instead of gold, oil and the stock market have been the inflation vehicles of choice. That all being said, I believe there is now another trade setup in gold.
In the chart above, we can see that the topside of the breakout trendline held in as support and in April the price has tested those lows. After a few days of grinding, a bid in gold is starting to emerge. I think this trade will be slow to the upside, but I'm betting on a steady climb back to the March high and from there for a 'W' pattern to emerge by testing the old February high. Any breakout from there means gold will be off to the races, but I believe that time is somewhat far away.
Buy gold here at 1299 (GC futures or GLD)
Target 1: 1322
Target 2: 1345
Stop: 1285
In the chart above, we can see that the topside of the breakout trendline held in as support and in April the price has tested those lows. After a few days of grinding, a bid in gold is starting to emerge. I think this trade will be slow to the upside, but I'm betting on a steady climb back to the March high and from there for a 'W' pattern to emerge by testing the old February high. Any breakout from there means gold will be off to the races, but I believe that time is somewhat far away.
Buy gold here at 1299 (GC futures or GLD)
Target 1: 1322
Target 2: 1345
Stop: 1285
Trade active
Comment:
A rather large move in gold overnight has this position profitable very quickly (if you were trading futures)
Trade closed: stop reached:
Stopped out after some initial gains.