Hello folks, for those of you that saw my weekend video update I hope you were paying attention when I said Gold is setting up for a very nice short trade; -to the downside!!
As you can see in the chart below, my fundamental belief is that Gold could go higher, but I also believed it was way overbought and extended far beyond where it should be….I point out in this chart below (as well as this weekend’s video posting) that a Short position in Gold would be in order should it go below 1400…
You can see in the chart how the Bearish Divergence is very significant…in fact, this is an almost text book view of what Bearish Divergence looks like…if you were to also look at the RSI indicator you would see the same thing; -that Gold will fall…the only question is when will it fall?
Just jumping into a short position is not recommended since Gold has plowed higher and higher with ever increasing Bearish Divergence, but the drop would come…this is where my indicators and my short term EMA crosses helped me make my decision…it turned out to be a big fall since I also mentioned in this weekend’s update that when Gold falls it does so aggressively…and remember in the futures markets Gold is worth $100 per point which is a very nice return for a quick one day drop…for those of you that are not trading futures just yet, then the ETF GLD would have been in order…using options or just a straight purchase….
Trade Smart — Not Often