Let's examine the action in gold in 2008. From the March 18 peak, we saw a 175 point correction, followed by a Fibonacci 78.6% retracement, followed by a total breakdown in the precious metal:
We may be seeing a similar scenario play out in 2009-10. From the December 3, 2009 peak, we saw a 180 point correction, followed by a retracement that is nearly 78.6%. Today, gold closed at $1179, and it needs to hit $1186 to complete hit the Fibonacci 78.6% level:
As a trader, we've hit a low risk area to take some profits and tighten some stop losses. If gold breaks down again, we've captured nearly all the profit to be had in the $100 run since late March. If gold continues its rise past 1200, we can get back in feeling fairly confident we're past the danger zone and gold is headed to new all-time highs.
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Greetings from 2+2,
ReplyDeleteFrom the March 18 peak, we saw a 175 point correction, followed by a Fibonacci 78.6% retracement, followed by a total breakdown in the precious metal
I would argue that the total breakdown was not a reflection of the market but a perversion of the market by a few large commercials.
We should see the fib 78.6% level this week. I predicted May, but it seems the DOJ JPM silver manipulation story is getting around... so we may see a good breakout continue into this summer fettered only by potential options expiry beatdowns by "said" large commercials, and the regular technical corrections.
So you are out until $1200?
MMR
Hi MMR
ReplyDeleteNot out yet. I plan to take some profits at ~$1185 this week unless we just blow past it.
Good things, I stated in mid april (and 4-21) on 2+2 we should be trending up to test 1200 and 19 for silver. We know trouble lies ahead breaching those levels, profit taking at $1190 is my goal.
ReplyDeleteGreat looking blog B, I'll check back for some of the other posts.
How long have you been trading Au?
MMR
Hi MMR
ReplyDeleteI've been following gold and silver since 2005.
BTW I took profits this morning and am watching patiently now.
Greeting B,
ReplyDeleteGlad I hit 1190 this morning, that was close.
Good job MMR.
ReplyDeleteAre you short now? I'm thinking of shorting the rallies with a ~$1025 target.
Thank you B. I am concerned this (in the short term) relies on a market correction as gold has seen a 0.5 correlation for about 6 months.
ReplyDeletehttp://www.assetcorrelation.com/user/corr_time
A quick snapshot of GLD's correlation with QQQQ for example shows that this correlation is turning around and we should see 0.3 and a trend towards negative correlation later this year.
This correction to 1025 is possible, but I would probably be long at 1150 and am currently long silver based on what I would call an over correction. $17.20 was just too low.
I would not mind silver having trouble right though, as the 100 and 200 day MA are converging and would be a big bullish signal for another move to test $19.
MMR
Hello B,
ReplyDeleteCaught the bulk of a 7% jump in silver.
NYMEX went vertical after 12:00est!!
Looks like gold breaking $1225 and silver breaking $19 will both be a pretty obvious double top on both. Downward pressure below the 100 and 200 day moving averages is not likely in this climate (hence my bullishness on silver at $17.20). The other side of that coin is a potential run to test an (probably fail) to reach $1300 Au and $20 Ag.
Just my feelings before this move and what should come next.
MrMusicRecorder
I see your point now B, maybe after the double top over $1200, looking for RSI to head toward 80 before a correction. I assume if this correction occurs it should test the 50day MA at $1136.36 (currently) which is quite close to your $1125 figure. We will see how scared the market gets about Greece and 1,000 point moves.
ReplyDeleteMMR now @
http://nationaleconomist.blogspot.com/
as of last night