Another Gold Trade Idea

05 October, 2009 by Stephen Leahy Boston Oct 5 16:46 EST “The odds are in your favor.” Those were the

05 October, 2009 by Stephen Leahy

Boston Oct 5 16:46 EST

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“The odds are in your favor.” Those were the words of a friend on a buy-side desk when I mentioned to him that I see the charts of Gold showing a sell signal at the top of the channel that we have been in lately. My point being….that is all I can ask for. No one knows what the outcome will be. As a trader, you put some sort of analysis to a situation, assess the upside and downside, and either place the trade or not. So let’s see what we are talking about here.

We mentioned a few weeks ago that we thought there were Stop Loss levels in the $1,020 – $1,030 range and that we would short Gold (current bid $1,016.60) if it took out some stops above $1,020 but did not charge through the $1,030 level. We entered the trade on Sept 16 and took our profits on Sept 24.

To be fair, we missed this recent move higher. Our posting of Sept 28 noted that we were looking for a $974 entry point, but Gold never got below $983. Nothing done.

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Here we are again, just below $1,020. If we can not break through the $1,024.30 intraday high from Sept 17 in the next trading session or two, we will short the pair again. A lack of follow through this time will give us a lot of room on the downside. we think we would target the $970 – $973 level for a take profit.

So no trade for now, but we are watching closely.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions for the below image.

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