Strat­egy:

Finweek English Edition - - COMPANIES & MARKETS -

Traders en­ter in di­rec­tion of the next break­out. The gold price is in an as­cend­ing triangle (lines 2 and 3). It was test­ing line 2 sup­port (US$1 368) at the time of writ­ing. How­ever, it can break out in ei­ther di­rec­tion. The sto­chas­tic os­cil­la­tor (on top) is in its over­sold re­gion, which is typ­i­cally a bullish sign. How­ever, a clear break­down of line 2 will lead to fur­ther sell­ing off be­fore gold’s next rally. While in­vestors should still hold, traders are to en­ter in the di­rec­tion of the next break­out. There­fore, a close be­low $1 355 will be a sig­nal to sell short. But a close above $1 420 (line 3) will be a buy (long) sig­nal. Do which­ever hap­pens first. The tar­get for a short sig­nal will be $1 270 at line 1 sup­port (which co­in­cides with its 200-day mov­ing av­er­age, which pro­vides fur­ther sup­port). For a break­out to the up­side look for a rally to $1 500 – ie, the height of the triangle pro­jected up. For a break­down, the stop-loss for a short­ing will be a close above $1 372. For the buy sig­nal the stop is a close be­low $1 405 (spot prices).

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