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Authored by Joe Vartanian, Senior Broker, Halifax America
Gold has been one of the surprise markets of the 2017 trading year. The market failed three times at the $1300 level. However, the market had a quick rally at the beginning of the September fueled by geopolitical tensions with North Korea and new speculative buyers playing the technical break out of the $1300 level.
Will Gold hold the $1300 level?
The market had a pretty sharp and quick sell off from the $1360 level that can be seen in the daily chart of December gold below. At the time of this writing the December Gold contract was trading around the $1312 level. The market looks poised to test the $1300 level.
Below are a couple strategies that can be used to play the current price levels.
A potential trade is to sell the market with a protective buy stop around $5 above your entry level. Consider covering your short position around the mid to low $1300s. Always be prepared to renter the short side of the trade if the market does not hold the $1300 to $1295 level. One of the most difficult concepts for a trader is to re-enter the trade at worse levels then you got out. This is a key concept that must be learned to have long term success in trading. Always the let the market dictate your next step as opposed to your own perceptions.
But what happens if the $1300 level does not hold? The $1300 level should be a critical support level for the December Gold market.
Another strategy can be to wait for an entry on the long side of the market around the low $1300’s with a relatively tight stop around the mid to high 1290’s. If the market does not hold around the $1300 -$1295 level we could see a potential wash out to the next level of support around the $1270 level.
Daily Chart of the Gold Market
The Gold market seems poised to test the $1300 level. It should be interesting to see how the market behaves at that price level. Will speculators feel like there is value in the long side of market at the $1300 level? If the market does not hold the $1300 level it should see continued pressure to a potential washout to the $1270 to $1265 level. Any new geopolitical tensions like the United States shooting down a North Korean missile will be supportive of the market and should temporarily reverse any downside pressure to the market.
If you have any questions on or would like more information on any market strategies, please contact Joseph at 818-928-3108 or via email: email@example.com. I look forward to hearing from you.
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