Thursday, September 22, 2011

Gold Update

Gold has corrected 9 days off the recent new high. That is longer than any other minor correction for the last 8 months or so. This suggests that a high is likely in on gold. It needs to decline a couple more percent to become significantly greater than the recent sharp correction. That would be good added confirmation as well.

It is a bit oversold on the daily chart for me to suggest an entry here, though it may very well be a reasonable entry. My hope for this market is to get some further downside and then a significant rally to a lower high with an overbought stochastics in order to suggest a short or inverse trade on gold.

Short oil or USO looks to me to be a good intermediate term trade right here. I expect some retracement of the large gap down today, but I don't expect it to be too much. In any case, a stop above the recent swing high should be used if shorting.

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