On April 12th I wrote a blog post titled Precious Metals Melt-Down, and How To Manage It. I
talked about how gold, silver and gold mining stocks have been flying
under the media radar for over a year and that they were not catching
the attention of traders, investors and the public anymore. I also said
it would take some sharp price action (breakdown or rally) for it to be
front and center again on TV, Radio and Newspapers.
But since gold has plummeted 17.5% dropping from $1600 down to $1320
per ounce with silver and gold stocks falling also they are now headline
news once again. This move has caused some serious damage to the charts
when looking at it from a technical analysis point of view. Below are
some basic analysis points that show a new swing trading entry point.
The Technical Traders Chart Analysis:
Broken Support – Once a support level has been broken it becomes resistance. Gold is trading under a major resistance level.
Momentum Bursts - Since the April 15th low, gold
has been setting up for another short selling entry point. Remember the
market tends to move in bursts of three, seven or ten days then price
reverses direction or pauses. It has now been 10 days.
Moving Average Resistance – Gold has worked its way up to the 20 day moving average which can act as resistance.
Bearish Inside Bars – This type of chart pattern points to
lower prices. When there is a big down day followed by 3, 7 or 10 up
days inside the price action of the down bar we can typically expect
another sharp drop which tests the recent lows as shown with the arrow
on the chart.

Gold Short Selling Conclusion:
In short, gold is setting up for a low risk entry point that should
allow us to profit from lower gold prices. Using an inverse ETF like DZZ
or even the gold mining stock inverse ETF DUST could be played. These
funds go up in value as the price of gold falls.
While I expect gold to pullback, I do not think it will make another
leg lower. Instead, a test of the recent low or pierce of the low by a
few bucks then reverse and start building a bullish basing pattern
before going higher.
Get My Book Free and Learn How To Manage Your Trades, Money & Emotions: http://www.thegoldandoilguy.com/trade-money-emotions.php
Chris Vermeulen
Posted
04-30-2013 9:17 AM
by
Chris Vermeulen
Filed under: GLD, SLV, Gold Trading, silver, gold, silver trading, gold miners, gdx, gdxj, sil, silver miners [Edit Tags]