Do You Trade Gold With The Bullish Percent Chart and Cycles?

By: Chris Vermeulen | Sun, Apr 19, 2009
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So many people want to know how to trade gold and to be honest, if your patient enough to wait for a buy signal and low risk setup then trading gold can really pay off with only a few trades. This report shows a couple charts which I follow to help time my trades. My trading model allows us to trade any sector but I prefer to trade gold and oil because of the accuracy which they have provided in the past.

Trading with the Bullish Percent Index (BP)

The BP chart is great for finding overall trends in a sector. I focus on the trend and try to find patterns/cycles to help time pivot points for trading gold and gold stocks. Each sector has its own cycle length so do not try applying the same cycles to different sectors.

The chart below clearly shows the gold miners BP chart which has been in a strong up trend since December. The current cycle has just turned up for the gold index indicating we could see higher prices this week.

The Gold Bugs Index (Gold Stocks)

Trading gold stocks is a very exciting and profitable niche to trade. I have traded many other sectors and the top two sectors I specialize in are Gold and Oil (energy).

Trading using technical analysis is my strong point. I combine multiple time frames, trend lines, momentum, commitment of traders (COT) and several other inter-market relationship trading vehicles. After analyzing this information very accurate trading signals can be generated.

Trading gold stocks using a proven trading model and risk management helps to keep trading signals black and white taking the guess work out of trading. The chart below shows that gold stocks are near a support level and when you combine this with the BP chart above which just turned positive I know I can start looking for some potential long positions in gold of gold stocks if we do happen to get a strong reversal to the upside.

How To Trade Gold (GLD ETF)

Gold is currently trading at a pivot point and will most likely make a sharp move higher or lower from here. This has many traders on edge right now. I prefer to stay in cash during times like this and jump on the wagon once a direction has been confirmed and I have a low risk setup.

What makes this a pivot point?

  1. Currently at the December highs which could act as support
  2. Gold has formed a Head & Shoulders pattern and broken the neck line
  3. The current pull back looks like a simple ABC retrace before moving higher
  4. Gold is currently trading at the 200 day moving average which could be support

How To Trade Gold & Gold Stocks - Trading Conclusion:

Learning how to trade gold and gold stocks can be done very easily if you know what to look for and have patients. I don't trade gold every week but that's what I really like about my trading model. It's simple and I don't have to be glued to the computer every day.

I can quickly look at the charts and know if I could have a potential buy or sell signal with a few days. If I do then I watch the charts, if not I focus on answering my members trading; emails and look for other possible trades in other sectors like the Nat Gas and Russell 2000, etc...

As you can see from the charts above gold is at a crucial pivot point and only time will tell before we know where gold is headed. Once we have a direction I will be looking for a low risk setup which is a trade with less than 3% downside risk for putting our money to work.

If you would like to receive my Free Gold & Energy Trading Reports and Signals please visit my website: 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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