Gold presents a good chance at a good risk to reward trade
Gold dropped hard yesterday through a support trend line awakening the bears. The drop was anticipated as it appears to be a smaller degree 5th wave to finish off the purple 'B' wave. That drop took us to the 78.6% retracement level of the June-July 2014 up trend.
This places Gold at a price point where we are offered a good opportunity to buy with nearly a 1:3 risk to reward ratio. This would be a final push higher in wave 'c' of 'E' to finish off the longer triangle. The stop loss is placed just below the June 2014 low at 1239.
We will conservatively look to take profits near the July 2014 high of 1345. However, wave 'E' typically overthrows the resistance line to fake the longs out. However, since this would be the final push of a long term consolidation, we won't get greedy and thus take profits at 1345.
Long term triangles like this tend to terminate and reverse on dramatic news so we'll see what happens in several weeks if prices do indeed make its way up towards 1345-1370.
This places Gold at a price point where we are offered a good opportunity to buy with nearly a 1:3 risk to reward ratio. This would be a final push higher in wave 'c' of 'E' to finish off the longer triangle. The stop loss is placed just below the June 2014 low at 1239.
We will conservatively look to take profits near the July 2014 high of 1345. However, wave 'E' typically overthrows the resistance line to fake the longs out. However, since this would be the final push of a long term consolidation, we won't get greedy and thus take profits at 1345.
Long term triangles like this tend to terminate and reverse on dramatic news so we'll see what happens in several weeks if prices do indeed make its way up towards 1345-1370.
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