In case you hadn’t noticed, gold is now at a critical technical level once again, closing on Friday in the spot market at $1410.10 per ounce, after a week of sideways price action at this level, as we begin to test the triple top in the $1425 per ounce area. Triple tops are one of the most important and significant technical levels for chartists for two reasons. First, a failure at this level will then create a fourth consecutive top, which is extremely bearish, whilst a break above this level is very bullish, and should we see a break out higher, which is what I am expecting, then do not be surprised to see the gold price move up very quickly in a sharp upwards move. Once clear of this region, the platform of support below will be extremely strong and as such provide a very solid barrier should we see any short term retracement.
The moving averages are all suggesting a move higher, with both the 9 and 14 day moving averages having crossed above the longer term 40 and 100 day moving averages, ansd with the 200 day moving average also sloping higher, bullish momentum is now firmly in place for the precious metal. Indeed on Thursday, we saw the low of the day test the 9 day moving average, which held firm, always a strong signal that the upwards momentum is holding firm. However, as always we need to be patient and wait for a break and hold above the $1430 per ounce region, but once clear of this area, then expect an extended bull run for gold during the remainder of this year. So the message here is very simple – wait for the price to break higher, and then buy gold, either physically, in the futures market, in an ETF or in gold stocks.
Hi Anna, which Gold ETFs would you be considering after the breakout?
regards,
John
Hi John – many thanks – I usually trade gold using pure futures, mining stocks, and physical, rather than ETF’s – I’ve never been a big fan of ETF’s I’m afraid. The gold stocks I have on my watch list at the moment include Goldcorp, and Yamana. The triple top is key though whichever you use – if it breaks above this level then we should see a very strong trend develop. As soon as it does ( which is what I expect), I will be buying on strength – regards Anna
Hi Anna, I have followed your website and Facebook page for a while now and I find your work really helpful – thanks!
I see gold has now broken through the triple top resistance of $1,425 – so I’ve bought GLD LEAPS and Gold Jun 2011 futures today – but now I see your comment about buying on strength – have I jumped the gun and bought too early do you think?
Regards
Alex
Hi Alex – many thanks for your kind comments and to answer your question very simply – no, I think everything is looking very positive at the moment for both gold and silver, and in fact I believe that silver could well outperform gold this year. The US dollar continues to remain weak and looking ever weaker on the dollar index as well as on several index related charts, and with equities now at critical and key levels, this is all adding to the bullish picture. Provided you have protected your positions, and these are longer term trades, then the outlook remains positive. Hope this helps but as always in trading you can never be sure, – indeed I am about to write about my experience in US Cocoa futures this week, which was alarming to say the least! – kind regards Anna
Thanks for your very quick reply Anna, much appreciated – I have both gold and silver futures, so reassuring to know your thoughts – I think June and July contracts are long enough to see a positive move.
Good to know your thoughts on Silver too thanks – because I had thought that this would be the case this year.
Sorry to hear about your experiences with Cocoa – I also hold Cocoa futures, but I have played a futures option spread so I’m still in my trade – and up!
Very concerning news with these “flash crashes” – especially if it’s taking you out of your position only to immediately recover. I guess it will take a catestrophic event before this is addressed though!
Thanks once again for all your updates – It’s really a great resource and good support for us novice traders!
Best regards
Alex