By: Joseph Russo | Fri, Mar 9, 2012
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How Sexy was Gold last month?

Well, if you look at our short-term mark-to-market performance for the month of February, you would at first glance conclude that from its perspective, Gold was not very sexy at all.

However, if you take a minute to read about one of the deceptive nuances of mark-to-market reporting, you will soon come to realize, that with respect to short-term trade in Gold futures, February was indeed a rather sexy month here at Elliott Wave Technology.

This feature provides a more concise follow-up and visual account of exactly how things panned out for us. In fact, the Gold market in February was...


We have split the following five charts between two genres to chronicle precisely just how sexy and titillating the short-term Gold market was in February.

Before we get into more eye candy, (of the charting kind that is) let's warm up by getting better acquainted with the methods used to court the market in this regard.

The first of the two methods of engagement involves the identification of chart patterns that yield specific point values within their construct. Let's take a look at these first.

Chart Pattern Trade-Triggers ...(Let's Get VISUAL)

We identify these patterns quite simply with a trajectory or trendline, which we then refer to as trade-triggers. Naturally, each trade trigger harbors a directional bias; it is either bullish or bearish.

Typically, we use buy-stops to move long and sell-stops to go short in order to speculate on these types of chart-pattern trade-triggers. As you will see in the charts that follow, the entire process from pattern to trigger to price-target is totally a visual experience.

In addition to identifying the trigger lines in advance, we also identify a specific price, pivot point, or stop-loss level at which the trade would technically fail. This allows us to measure the full risk associated with each particular setup before deciding whether to take the trade or not.

Furthermore, each trigger-line drawn has a specific upside or downside point value associated with it. These point values provide us with a precise profit and exit target, which upon achievement, we capture via the placement of resting limit orders to exit, which we set just moments after our initial entry orders fill.

Insofar as we are concerned, Chart Pattern Trade-Triggers come under the classification of "Charting and Forecasting." As such, we feature them regularly in the Near Term Outlook and Position Traders Perspective, which you can learn more about here, and yes, we use these triggers successfully in all timeframes.

With that said, now we can move on to that eye candy (within the genre of charting and forecasting) that we alluded to earlier.

The February Gold Chronicles:

We begin our journey back on January 9, 2012, with an extract from our Near Term Outlook publication.

Within the archived image posted below, the first paragraph of commentary prefixed "ABOVE," describes a full-size longer-term chart that resides at the top half of its page, which we removed in order to draw your attention to comments prefixed "LEFT," which describe the advance setup of our first chart pattern trade trigger.

In the last line of the second paragraph, we stated, "Though a pullback toward 1563 is plausible, so long as the 1522.60 low holds, we cite a 113-point buy trigger on a breakout above the falling green trendline."

Looking at the 30-minute Bar chart of Gold below, you can visually see a falling green trendline with a green up-arrow with a 113-pts reference tag associated with it.

Upon closer visual inspection, it was rather clear to observe that this prospective buy trigger (basis nearby Gold futures) would elect upon a move north of 1630 or so. As such, we set buy stops to move long at 1630 with initial sell stops to cover beneath 1522.50, which risked 107-pts, giving us a little better than even odds in our attempt to capture this triggers 113-pts of upside.

In addition, if our resting buy-stop order filled, we would immediately set limit orders to sell 113-pts north of the trigger-point or in this case at an exit price of $1742 dollars an ounce.

Chart Points for Monday

On the next day, January 10, 2012, gold... >> continue reading here

Until Next Time,

Trade Better / Invest Smarter



Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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