In my last post on Gold, I was looking to short at trendline resistance. This hit on 11/17 and contained price as expected. However, price briefly went above the trendline, and then was sharply rejected lower, to Monthly support at 1271. When price makes a false move, it makes a fast move in the opposite direction. We are now back in the wedge that has been forming for the past 2 months.
Normally, a wedge like this would not be traded. However, the clear rejection of 1300, and the fast move downwards, proves that there is less commitment from buyers, and a breakdown from the wedge is a legitimate scenario.
I will sell the monthly level at 1281 with a tight stop. If price moves to the top of the wedge, I will short again - with a tight stop. And of course, I will sell the breakdown from the wedge.
This is a more aggressive style of trading. Why? Gold has rejected new highs for 2 consecutive months, and a break of the strong support in the 1250-1270 area could result in a waterfall decline to the 1210 area - my target on this run.
Normally, a wedge like this would not be traded. However, the clear rejection of 1300, and the fast move downwards, proves that there is less commitment from buyers, and a breakdown from the wedge is a legitimate scenario.
I will sell the monthly level at 1281 with a tight stop. If price moves to the top of the wedge, I will short again - with a tight stop. And of course, I will sell the breakdown from the wedge.
This is a more aggressive style of trading. Why? Gold has rejected new highs for 2 consecutive months, and a break of the strong support in the 1250-1270 area could result in a waterfall decline to the 1210 area - my target on this run.