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So many
people want to know how to trade gold and to be honest, if your patient
enough to wait for a buy signal and low risk setup then trading gold can
really pay off with only a few trades. This report shows a couple charts
which I follow to help time my trades. My trading model allows us to trade
any sector but I prefer to trade gold and oil because of the accuracy which
they have provided in the past.
Trading with the
Bullish Percent Index (BP)
The BP chart is
great for finding overall trends in a sector. I focus on the trend and try to
find patterns/cycles to help time pivot points for trading gold and gold
stocks. Each sector has its own cycle length so do not try applying the same
cycles to different sectors.
The chart below
clearly shows the gold miners BP chart which has been in a strong up trend
since December. The current cycle has just turned up for the gold index
indicating we could see higher prices this week.
 
The Gold Bugs Index
(Gold Stocks)
Trading gold stocks
is a very exciting and profitable niche to trade. I have traded many other
sectors and the top two sectors I specialize in are Gold and Oil (energy).
Trading using
technical analysis is my strong point. I combine multiple time frames, trend
lines, momentum, commitment of traders (COT) and several other inter-market
relationship trading vehicles. After analyzing this information very accurate
trading signals can be generated.
Trading gold stocks
using a proven trading model and risk management helps to keep trading
signals black and white taking the guess work out of trading. The chart below
shows that gold stocks are near a support level and when you combine this
with the BP chart above which just turned positive I know I can start looking
for some potential long positions in gold of gold stocks if we do happen to
get a strong reversal to the upside.
How To Trade Gold
(GLD ETF)
Gold is currently
trading at a pivot point and will most likely make a sharp move higher or
lower from here. This has many traders on edge right now. I prefer to stay in
cash during times like this and jump on the wagon once a direction has been
confirmed and I have a low risk setup.
What makes this a
pivot point?
1.
Currently at the December highs which could act as support
2.
Gold has formed a Head & Shoulders pattern and broken the
neck line
3.
The current pull back looks like a simple ABC retrace before
moving higher
4.
Gold is currently trading at the 200 day moving average which
could be support
5.
How To Trade Gold
& Gold Stocks – Trading Conclusion:
Learning how to
trade gold and gold stocks can be done very easily if you know what to look
for and have patients. I don’t trade gold every week but that’s
what I really like about my trading model. It’s simple and I
don’t have to be glued to the computer every day.
I can quickly look
at the charts and know if I could have a potential buy or sell signal with a
few days. If I do then I watch the charts, if not I focus on answering my
members trading emails and look for other possible trades in other sectors like
the Nat Gas and Russell 2000, etc…
As you can see from
the charts above gold is at a crucial pivot point and only time will tell
before we know where gold is headed. Once we have a direction I will be
looking for a low risk setup which is a trade with less than 3% downside risk
for putting our money to work.
Chris Vermeulen
Editor, the Gold and Oil
Guy
Read
all the other articles published by Chris Vermeulen
Chris Vermeulen is a
trader and newsletter writer specializing in the price of gold GLD ETF,
Junior Mining and Energy Stocks listed in the US, Canada and Australia.
Please visit his website for more information.
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