Gold is finally popping off: Target $2500

10 mar

I have not posted a long idea on gold for over 2 years.
Gold was going sideways but now the long awaited bull run seems like it is there.
Unlike Bitcoin and the S&P500, here I actually know what to do and I am confident we will go higher.

Reasons for going higher
1- The gigantic full green candle at all time high on the weekly chart.
2- Market psychology: we are now in phase where investors are starting to be optimistic, but they are not losing their minds making calls for 1 million either, yet.
3- Inflation has become a (minor) issue. Inflation in the US, EU and Japan is now at 3%, it used to be at or below 1%.
4- BRICS countries have agreed on using gold as the basis for international exchange, instead of the US dollar.




Target
My target is slightly under 2500. The reasons for this are as follow:
1- It is between the 1.618 extension from wave 1 starting at the 3 year low and 2.618 from wave 1 starting at the 6 months low. See chart below.
2- 2500 is the next psychological level of resistance, before that there is nothing since we are above 2000 and at all time high.
3- My own trading system mathematic formula points to the 2400-2600 range (2 sigma of potential targets in that range).

To sum up it's actually simple: Fib extension + Resistance + Statistic based model.




Entries and risk

I'll look for retraces of at least 50%.
As well as a previous high that has proven it could hold as support - recency is important.
Good entries and the momentum will allow to aim for high reward to risk ratios, at the very least of 5 to 1. I'm aiming for 10 to 1 or better for my part.

It will look a little like this:


It is also possible to look for gold companies to invest in for people that are more into that.
Not my thing and I'd rather stick to my comfort zone so I do not have more to say about it.

Trade invalidated
If the price drops below 1500 I won't be bullish anymore, I won't look for longs, and I will have to re-evaluate (my whole life).

12 apr

Nota

Dear gold it is just going up in a straight line. $2400. What a beauty.
I absolutely expect gold to go to $2500 now, and even beyond.
I did not get to add to my position. I wish I had more in.
For me winners are usually either of moderate size and quick, or big and slow. Can't have it all.


The price is getting close to my target area.
Therefore now I am getting ready to get out.

I expect one of four things :

A/ It keeps going up strongly. I will stay in of course, with a short term trailing stop (maybe 2-4% order of magnitude, something in that area).
The price is up 20% since the bottom in February.
It has rapidely gone up 30-40% in the past so it is within the realm of possible.
Peter Schiff says banks want to buy without driving the price up, this is true, but it is going up regardless it is not up to them, and it's not like they can manipulate the price down as they allegedly could with their own currency.


B/ The trend weakens then the price tanks.
A classic thing price does is slow down before falling. This is not always the case.
And there are different types of price action, rising flag, falling flag, and so on.
If this happens I have time to think, and perhaps use ema's or trendlines to trail my stop.



C/ Straight immediate drop
Price starts crashing I'm exiting. It could go anywhere from 2500-2600 or even higher then just collapse back to 2k in a straight line before going sideways for months. Anyway as soon as I see really big red candles I am not sticking around to find out if I am wrong or right.



D/ Stop me and then go back up
This is a possibility, price could shake me out then go back up. But I do need a risk management strategy and at some point get out even if it means missing out. Because when we do not get out sooner or later it keeps going down and down and down. I want a high risk to reward ratio.
The most frustrating thing would be placing my stop really far away, it getting hit and then the price going up. At least when I use a tight stop I am the one deciding to potentially give up profit, I am not just getting bullied by the market after I tried so hard to stay in.

20 ago

Nota

Today Gold has gone past the target zone, I'm still holding, I'm considering getting out at the first sign of trouble, I might post an idea about that.
The sideways between 2300 and 2400 was so bad with the price never bottoming at the same level, I was not able to add.
With the price past 2500 I am absolutely NOT looking to add. I could look for longs in the future but not a near one, not before I see NEW waves up. It looks too much like wave 5 for me to chase the price, could be wrong but less is more.