I have not put on a “swing/position” trade yet in Gold since starting the subscription based service on September 9th, 2012. I am biased to the long side, but a favorable trade location for a swing trade hasn’t presented itself in regards to probabilities, reward and risk with my methodology. It has been wise over the past three weeks to stay on the sidelines in that respect.
As far as patterns go, today there was a textbook bearish “Head and Shoulders” pattern on the 5 minute chart below with the “measured rule” target getting nailed quickly.
I would prefer to see the 1,755 area of previous support in the daily timeframe get tested, and a consolidation pattern develop over a few days on the 30 minute chart. This is where I would like to get long on an upside breakout and perhaps stay long on a trailer through 1,800 in what would offer an extreme multiple of reward to risk taken.
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In this past weekend update I talked about the Metals and Mining Exchange Trade Fund symbol XME. It is no secret that I have no use for “technical indicators”, but the relative strength line makes sense to me. There are no complicated formulas or sorcery involved. The relative weakness of XME compared to the S&P 500 in the weekly and daily timeframe is glaring.
XME had a few saves at the neckline of a bearish Head and Shoulders pattern on the weekly char recently, but I know I wouldn’t want to press my luck next time if I was a Bull.