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Soup Nazi

Soup Nazi

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Published by rmullis

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Published by: rmullis on Feb 01, 2012
Copyright:Attribution Non-commercial

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12/16/2014

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Paper gold continues to make higher short term highs and higher lows, and the trend of the chart daily chartcontinues to be bullish. A trader using my methodology entered a long trade after the 1605 swing low andhas never been stopped out since. I will always put a stop below the latest swing low and call that my exit.Every swing low since 1605 has been higher than the previous swing low. However, I also will not wait forthe stop if stochastic loses embedded status (3 days or more above 80). On any correction, this would likelyoccur prior to the latest swing low around 1650 being taken out. I now have a green trend line on the chartwhere I believe any correction will likely find support if the bullish case is to endure. The 18 day movingaverage is climbing sharply and lies just under that line. This average is what I always expect to see as asupport target when the stochastic embed is lost.Resistance overhead is coming from the swing highs around 1760. Additionally, the Bollinger band isserving to contain price. You can expect price to remain outside of the Bollinger band only 2.5% of thetime, either above or below. Odds will favor the price moving lower or sideways to enable the bands tocontain the price. Support is coming from the 100 day moving average at 1692 and lower by the 18 daymoving average climbing through 1668. As I said above, If I were still trading I would close my position onthe the event of the stochastic crossing the 80 level lower.
 
 The expanded daily chart gives a little more perspective and shows just how steep the move off the 1524has been. Usually a steep reversal like this will correct lower to enable more buying energy to accumulate.However, just look at the July - Aug time period and notice the steep ascent that looks very similar to thecurrent one. Just about the time a technician is looking for a good correction, the price took off much higherand developed a grossly overbought situation as measured by RSI. Speaking of RSI, the current level has just penetrated the 70 level, a signal that price may be getting over-bought. Watch the stochastic todetermine whether a correction will have legs. As long as it stays above 80, full steam ahead. Notice whenstochastic briefly lost the embed, price went straight to the 18 day moving average.
 
 The weekly chart is my happy chart. This where I live as a gold buyer. I buy and hold, looking for bargainswhen I can get them. Clearly any price within the lower trend channel is a bargain, with the lower boundarybeing a screaming bargain. While buying in the upper channel is less of a bargain, if one is buying andholding for the duration of the current dollar death dance it matters not. The eventual Freegold price forphysical gold makes 100 dollar swings in price meaningless. This is why it is my happy chart. There is nobad time to buy physical gold, only marginally better times! Looking at the trend tells me that price islikely to continue to the top of the lower trend channel just above 1800. RSI is likely to reach the 70 level.

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