By: Scott Redler
I just wanted to post a couple of charts to illustrate the trade in gold. First we have the setup leading to the breakout higher in price. We had a reverse head and shoulders and a bull flag signal the long entry.
Next, take a look at the chart today. Gold reached the price objective of the inverse head and shoulders. While price may continue higher, I am comfortable locking in my profit as my objective has been reached.
Updated 12/6/09
At this point, I do not believe the trade to be over. I will look to buy back gold in three tiers–
- First tier long will be in the $1,120-1,080 area
- Second tier will be in the $1,040-1,060 area as I believe the India purchase of 200 tons from the IMF should provide a floor in the price of gold.
- Third tier will be when gold once again moves higher and the trade starts working.
