1.  I predicted on December 4th for my partners  that Gold could pullback to the 1040 to 1070 US ranges, with a mimimum of 1070 likely.  So far the Gold pivot lows have been to 1074, bounced up, re-traced to 1090, ran to 1145, re-traced to 1090 again.  I got the partners in my service us out of several gold positions issuing take profit alerts on the B wave bounce to 1135 recently, and we have held a few.  We sold our ICI.TO, JIN.TO, and AAU at much higher levels and remain out of those positions.

2.  Gold now appears to be in the C wave down in this corrective pattern from the Dec 3 highs.  It appears to me the $1040 US target is more likely now, and possibly lower.  I have a GLD ETF chart below.

I see a Gap at 102.50 on the GLD chart, and there is a chance that will fill.  This would represent a 50% Fibonacci pullback of the entire advance from April 2009 into December 2009.  A 61% retracement would push Gold even lower towards the 97-98 areas on the ETF.  I would not  be going long Gold right now until we see the patterns complete. I would also avoid going long Gold stocks just yet.  They will bottom before Gold bottoms, but the timing is still off.

The dollar is likely to bounce a bit further and a break over 79 on the Dollar to the upside certainly leads to another leg down in Gold.

With that said, we will monitor some Gold stocks for some washout pivot lows to possibly trade into at the right time.  I have avoided getting back into GSS for example because the chart is not yet right.

I thought this chart may be of interest to some of you as it shows two perfect textbook plays on the 4hr gold futures trading chart.

As you can see the first pattern is a reverse head & shoulders pattern. This is bullish and a breakout above the neckline would signal a buy point. Now if we use basic technical analysis with this pattern we can measure the potential move up by looking reverse head and shoulders pattern. You take the low of the upside down head $1075, and go straight up to the neckline at $1117. That is a total of $42. So if we add that $42 to the breakout point above the neckline then we can have a price target of $1117 + $42 = $1159.

As we can see the price of gold over the next couple days rallied to the $1160 level. Trading is not that easy but that is how it works in general. The hard part is knowing how to manage your trade and I scale out of positions as the price matures reaching short term resistance levels and by adjusting my stops accordingly to lock in maximum gains while minimizing downside risk.

A couple days later the same chart formed a regular Head & Shoulders and has since moved its potential measured move. I m not expecting a weak bounce in gold as with the overall stock market, but I am still not sure that the selling is over.

The “Weak’end Trading Conclusion:
In short, the market was turned upside down this week. Those who follow me should be in cash or mostly in cash as this drop was anticipated a few days ago.

Trading during fast moving markets is much tougher for swing traders as pivot points for indexes and commodities tend to happen during the intraday or during futures trading at night. High volatility like this is fantastic for active traders who focus on shorter time frames like the 4hr and 60minute charts, as opposed to trading just the daily chart and entering and exiting positions at the open and close each day.

I continue to watch the market and plan on providing some of these short term setups on the 4 hr chart using both the GLD etf gold fund and the YG Gold futures mini contract.

If you are interested in Trading Gold Futures and other contracts please join my Free Futures Trading Newsletter:

Chris Vermeulen

Attention all MarketClub Members:

A Weekly “Trade Triangle” flashed a sell signal on long positions and entry signal on short positions in spot gold this morning at $1,086.00. The market is currently trading at $1,086.00. Please use money management stops and be aware of the risks involved.

If you are not a MarketClub Member click this link for your free report sent to your inbox.

Gold Stocks and the Dollar

The HUI (Gold Stock Index) has been on fire the past 10 months. Both gold and gold stocks have been leading the market higher. But the past month we have seen gold stocks under perform the SP500 and as of today are testing a key support level. Only time will tell if it bounces or breaks, so keep a close eye on your positions.

I use the UUP etf of the US Dollar to show the price action of today’s price move. The US Dollar is now above a key resistance level and has started to move higher. If the Dollar continues higher commodities across the board will have downward pressure. This could trigger a large sell off in the gold and gold stocks which I think are still over bought using a short term time frame.

Gold & Oil Futures Trends

The trend of gold and oil has been down the past few days. Gold broke down in the past 24 hours in overnight trading which triggered a wave of selling when the US market opened.

Gold and oil are currently trading between key support and resistance levels. I am looking for gold to drift back up to the $1130 level where I will look for a short setup as the current price action is not bearish on the intraday charts.

Oil is still bullish so I am not really looking to short it at this time. I will wait for another low risk buy signal.

Commodity Trading Conclusion:

I feel the broad market could be ready for a large correction ranging from 5-10%. I am calling it a correction as I want to stay positive thinking. But it could be the start of a major market top. Market tops tend to be a process and take several months to roll over. So let’s focus on protecting our money and wait for a pullback that will allow us to load up with some great positions in the coming weeks.

Patience is how money is made in the market. Waiting for the market to come to you is vital for success. Also having the patience to let winners run by scaling out (selling a portion) of a position when the price reaches a support or resistance level makes it easier to let them run. Each time you sell some of a position you are locking in a profit and lowering your risk for the balance of that trade.

If you would like to receive my Free Weekly Gold Reports please visit my website:

Chris Vermeulen
www.GoldAndOilGuy.com

The gold trading chart below shows two different types of trends. The initial timeframe of the chart illustrates what I call a Normal Trend. This is a series of higher highs and lows.

This type of trend allows an investment to continue profitably for a very long period of time. For example a daily chart like the one below can continue to trend like this for 6-8 months. The reason for this is because price appreciation is increasing at a rate which investors are comfortable with. Also, the pullbacks cleanse the investment vehicle of weak traders every few weeks allowing fresh money to enter at higher price.

Now if you look at the later timeframe of this rally we observe a rally phase I call an Extended Rally. An extended rally is when price appreciates without any pullbacks.

You can make a fortune with this trend very quickly, but you must realize that reversals are fast and sharp. And that, we observe, is how GLD performed in December. While some call December’s price drop a pullback, I call it a technical breakdown. The sharp price reversal and heavy volume associated with this type of move generally provides excellent short term momentum trades. A lot of damage is done to the investment on a heavy volume breakdown taking weeks for a recovering to occur.

Normal trend rally, extended rally, predictably fast and sharp technical breakdown followed by weeks of recovery.

If you would like to receive my Free Technical Trading Newsletter for ETFS  and Futures please visit my website: www.TheGoldAndOilGuy.com

Chris Vermeulen

I posted this chart Monday afternoon to members as a short educational piece and to give warning to those where were currently in short term long positions. This chart clearly shows that when the short term trend is up and we get a black candle (Pop & Drop) the odds tell us that we should see lower prices over the next 24 – 48 hours for silver and gold.

This type of price action may look easy to trade, which it is, but only day traders and even better yet futures traders, can make the most when these setups occur. It doesn’t get anymore exciting than Trading after hours with commodity futures.

The nice thing about trading futures is that charts run around the clock 24 hours a day so you do not get price gaps that miss most of the short term low risk plays. Investment vehicles on the NYSE are limited to trading from 9:30am – 4pm and that really does cut down in the amount of low risk trade setups we get on a monthly basis.

Silver Commodity Trading Contract YI – Daily Chart
Silver has been tougher to trade than gold recently. Percentage moves are much larger with silver adding more potential risk to buyers and sellers. In addition, silver is not trending strongly like its big sister gold and this adds another level of difficulty. Profits should be taken quickly during this type of price action.

Gold Futures Trading YG Contract – Hourly Chart
Gold is my favorite and most profitable investment vehicle. I trade gold using the GLD etf and futures. Last week I wrote about this key resistance level and how I was waiting to trade until the Friday unemployment numbers were out and to see how the market reacted before putting our money to work. Over the weekend the bullish sentiment caused gold to gap above that key resistance level but has sold back down after beginning the new week.

The chart below shows that I am neutral/bearish for the next few days. Heavy selling and the small bear flag is warning me of lower prices. The natural tendency for gold is to drift higher through the night from 6pm EST – 4am EST, so we could see higher prices in the short term but what happens in the following 1-3 days will set the tone for gold.

If you would like to receive my Free Weekly Trading Reports, please visit my website.

Chris Vermeulen
www.TheTechnicalTraders.com

These three markets have a lot of volume, government implications, and technicals lining up for potentially great trades. Gold makes a record high, then pulls back. Silver is inching towards an all-time high level and platinum is making people rethink their decision to go with a white gold wedding band.

Where do you stand in these markets and maybe more importantly, where should you stand?

Click Below on the chart to find out what W.T.F. really stands for and what does it have to do with gold, silver, and platinum?

Gold closed sharply lower on Tuesday due to profit taking as it consolidates some of the rally off December’s low. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought and are turning neutral hinting that the corrective rally off December’s low might have or is coming to an end. If February extends this rally, the reaction high crossing at 1170.20 is the next upside target. Closes below the 20-day moving average crossing at 1115.10 would confirm that a short-term top has been posted. First resistance is Monday’s high crossing at 1163.00. Second resistance is the reaction high crossing at 1170.20. First support is the 10-day moving average crossing at 1121.10. Second support is the 20-day moving average crossing at 1115.10.

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The gold futures chart allows for us to trade prices around the clock 23 hours a day. A lot of important price patterns are analyzed from the over night trading hours which helps to provide low risk and high probability setups for the GLD gold fund.

This hour chart shows about 3 times more trading data on gold than the GLD etf. Using this data we know if gold will be gapping higher or lower the next day and if the price is trading near a support or resistance level, etc… I focus on selling short gold at resistance levels in a down trend and buying dips during up trends.

The futures trading volume is very interesting to look at. The selling volume was more than twice what we are seeing for this bounce/rally. A low volume rally/bounce is not exactly what we want to see for a move higher. I have my doubts about this being THE NEXT LEG HIGHER, but let’s watch it unfold.

GLD Gold ETF Trading – Daily Chart
Trading just the US market sessions does limit the trading opportunities. When commodity etf’s open each day they tend to gap up or down as the overnight trading move the price. To most traders GLD is an ugly looking chart because of its tendency to gap up and down each day. But when you focus on the gold futures charts for trend and price pattern analysis things become very clear.

Gold is moving higher currently and I am waiting for a low risk entry point before jumping on board. I don’t chase prices higher unless there is a lot of excitement in the air with lots of momentum to back up the higher risk play and, I do not feel this is a time to panic and buy gold.

February gold was sharply higher overnight due to a weaker Dollar and higher energy prices. Stochastics and the RSI are becoming overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If February extends the rally off December’s low, the reaction high crossing at 1170.20 is the next upside target. Closes below the 20-day moving average crossing at 1115.10 would confirm that a short-term top has been posted. First resistance is the overnight high crossing at 1163.00. Second resistance is the reaction high crossing at 1170.20. First support is the 10-day moving average crossing at 1119.90. Second support is the 20-day moving average crossing at 1115.10.

March silver was higher overnight as it extends the rally off December’s low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If March extends this rally, December’s high crossing at 19.500 is the next upside target. Closes below the 20-day moving average crossing at 17.510 would confirm that a short-term top has been posted. First resistance is the overnight high crossing at 18.890. Second resistance is December’s high crossing at 19.500. First support is the 10-day moving average crossing at 17.743. Second support is the 20-day moving average crossing at 17.510.