Gold and Gold Stocks Riding a Thin Line

By: Chris Vermeulen | Wed, Apr 8, 2009
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This week in gold we have seen prices drop lower creating a lower low. This is generally not a good sign if we want to see higher prices in bullion and gold stocks. That being said, a lot of traders are now starting to short gold because is has filling its gap lower which occurred Monday at the open due to over night commodity prices.

I am refraining from this short term play because of several things:

1. Gold is still within its support zone and could reverse any day
2. Although we have a lower low this pattern could very well be a 1-2-3 wave retrace
3. Stochastic Indicator for gold is starting to turn up indicating possibly stronger prices
4. Gold stocks are currently at a short term support level

GLD Gold Fund Trading Chart

Gold Bugs Index (Basket of Gold Stocks)

Technical Trading Conclusion:

The price of GLD has been retracing since February after making its big run from $70 to $98. We all know the market moves in zigs and zags and some bigger than others. And we all know that large moves always require some type of pause whether it's a sharp pullback, flag, Pennant, wedge or 1-2-3 retrace before continuing in the previous direction. Only time will tell what gold will do next. We simply must manage our exposure and focus on trading low risk setups when the momentum is on our side.

If you would like to receive my free gold reports please visit my site: www.GoldAndOilGuy.com.

 


 

Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
- OEC OpenECry
- The Fox Group
- Dorman Trading
- Vision Financial

He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/