Chart of the week: will gold climb higher?

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Gold $1,688 – Break Out. Target 23.5% Higher at $2,085!

Today I’m going to update you on my position on gold, continuing on from my note on 14 June 2012, “Gold $1,616 Working Hard Trying To Bottom: Accumulate for a 5.7% Upside Target.”

The ‘test the water’ trade above is turning into a ‘full position trade’ as gold now looks increasingly like it is about to re-trend upwards.

I now have three targets (see chart above):

  1. T1 $1,808 (7.1% higher),
  2. T2 $1,901 (12.6% higher) and
  3. The Ultimate Target $2,085 (23.5% higher)

Gold has been nicely forming a bottom with the key lows as follows:

  • 16 May – $1,527
  • 30 May – $1,531
  • 28 June – 1,547

We already have the following long positions:

  1. 20% entered $1,616 (unrealised profit of 4.5%)
  2. 30% entered $1,574 (unrealised profit of 7.2%)

Stop out was at $1,518. This has never been threatened.

The stop loss is now raised to $1,558.

Actions

Another parcel with 30% weighting ought to be entered into at current prices of $1,688.

A further and final parcel of 20% be purchased at $1,658 should the price return there.

Clearly Ben Bernanke’s testimony last Friday night at Jackson Hole has had an impact. The charts had indicated positive statements ought to have come out, and this has now been confirmed by price action.

What I like about the chart?

1) The 200 day moving average has been crossed from below by price action.

2) A solid base has been created now since my last article of 14 June 2012, “Gold 1,616 Working Hard Trying To Bottom”. A solid bottom has been established from 16 May to 15 August.

3) Broken out of resistance of $1,660.

4) Other indicators starting to show we are on the cusp of a new uptrend.

5) Target 1, 7.1% higher, of $1,808 is in view.

6) Target 2, 12.6% higher, of $1,901 is then expected.

7) Ultimate Target of $2,085, which is $2,085 has been projected.

What I don’t like

1) The 200 day moving average (the yellow line) is still pointing down. It would be perfect to see this start to point up in the coming weeks.

2) We are currently at the top of recent ranges. Moves back down towards $1,660 is expected, but any moves below this level that are significantly lower, and for more than a day or two would put into doubt the positives above.

Please note that my views are not for the Long Term. My method results in views expressed that relate to an outlook that lasts weeks or at most months. For example, my view on Shanghai’s Index has for now been met and completed since 22 March 2012, 11 days later. Currently regards Shanghai, I am in a cautionary observant position. Your utilisation of this information needs to take into account the time frame I set. The stocks recommended as “Steady as She Goes” may be held for the longer term, which for me means months.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should consider the appropriateness of the information in regards to their circumstances.

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