Spot Gold Recently Posted A Big Range Day That Opened Near The High And Closed Near The Low

Category: Finance, Currency Trading.

August 1st, 2007. So when I wrote recently to my trading signal clients that I had concerns with what I saw unfolding in the spot Gold( XAUUSD) market it was to protect the profit on the table.

It's one thing to let your profits run on a trade, but it's also true that it doesn' t make sense to take unjustified risks with profit that's on the table. On our open long trade I increased the trailing stop to lock in gains of+ 3% for the remaining portion( the other half of this trade was closed for a+ 8% gain) . If there's more market risk right now, what is the best way to manage it? Why am I nervous? Spot Gold recently posted a big range day that opened near the high and closed near the low. Of course these reversal days don' t always deliver further rapid declines, and if spot Gold pushes above the high of the reversal day at 677, then that is a very bullish sign. There have been three more of these reversal days during the past year, and in each case XAUUSD made further fast and significant declines within four trading days.

I now have a take- profit exit at 660 and a trailing stop at 658Spot Gold is currently trading near 66Both exits will deliver profit, but it's the difference between+ 3% and+ 2% gains, which is worth having if available. Then what? OK, so one of these exits will be hit. If XAUUSD pushes beyond 677, it should go all the way to$ 750 or more. If you' ve read my recent article on the global spread of risk aversion, you' ll know that I think Gold is heading north. So I' m placing a conditional buy- at- a- stop entry at 67If this is triggered, the initial stop- loss is 658 If spot Gold plummets from here( like it did in May 2006, after a reversal day) , then I want to be short at 640( sell- at- a- stop) , with a stop- loss at 67This would suggest spot Gold is entering its wave 3 decline( in Elliott wave terms) and should eventually continue down to under$ 54 It's always dangerous to insist that the market" proves you right" and moves in the direction you anticipate. But the beauty of this strategy is that I don' t have to be right!

View the complete article, including a chart of spot Gold, showing the reversal days, and a link to the piece on global risk aversion, at www. Gold can leap up to over$ 750 or slump to under$ 54I don' t care- I can make further profits either way. TrendSensor. com/ MarketBrief/ DISCLOSURE: Murray Nickel holds a long position in spot Gold( XAUUSD) , opened at$ 644