Gold Update 01/25/2011

Here's a Gold update for 01/25/2011 for new and regular readers of Online Stock Trading Guide and those who have gold investing strategies in place.

Gold is always a hot topic among traders and investors as it has an "excitement" around it, just by using the word itself.

The chart in my article below is based on GLD, the SPDR Gold Shares Trust which trades intraday like a stock and is popular among both traders and investors alike.

For those of you interested in taking advantage of declines in prices of gold, take a look at DZZ. It's a double short etf so not everyone will be interested in it because of the leverage it uses, but it's one of my personal favorites and I like to mention stocks or etf's that I have experience with myself when I can.

If you'd like to read my last article on Gold, you can find it here: Gold Update 16/16/2010 or via my Gold Investing summary page.

Today's chart and analysis goes over the price movement of GLD over the last few months and points out the signs along the way of potential weakness that would eventually occur. Even if you're a Gold Bull and feel Gold will go higher, (forever?), the same signs that have occurred over the last few months were ideal signals for at least some sort of pullback.

Gold Update 01252011

A couple of things I'd like to point out on the chart above of GLD:

  • The last two divergences shown above and on the chart from my 12/16/2010 Gold Update proved to be great entry points to go short upon noticing the divergences at $137-$139. Both times could have produced either short term profits or great entries for mid-longer term potential profits shorting.
  • After my December, 2010 update, prices bounced once again off the 50 Day Moving Average level yet made a lower high on the last trading day of 2010. Another signal of weakness and the potential for an upcoming pullback/decline.
  • Upon reaching the 50 Day Moving Average level once again in early January, 2011, prices this time moved a bit below and then made an attempt to move back higher only to fail. This was the third test of the 50 Day Moving Average in 3 months, with each time showing more signs of weakness with a consecutively smaller bounce each time.
  • Prices are currently testing the October, 2010 lows which is also the opening gap higher which was made in early October, 2010. A short bounce here back up towards $132-$133 wouldn't be a surprise to me at all, although not necessary either.
  • Using the two previous tests of the 50 Day Moving Average, you could have drawn a trendline which would have signaled the current move lower once it was broken on the third retest in early January. For more about trendlines, now through February 7, 2011, you can download a 14-page eBook free. Trading the Line

That's it for today's gold investing strategies analysis. The signals and patterns pointed out above can be found on individual stocks as well as etf's and other trading instruments. Looking back over past examples will help you to identify them as they are occurring in real time in the future.

Keep in mind that if a signal fails, having a stop loss in place along with good position sizing management will help to minimize any potential losses.

Return From "Gold Update 01/25/2011" To "Gold Investing"

Elliott Wave Videos

Learn to trade in the direction of the forecasted trend with this free video course. Click here to start watching: Free Elliott Wave Video Lessons

Free Newsletter Updates

Trading Resources

Stock Trading Software
Stock Trading Software
Stock Trend AnalysisStock Trend Analysis