Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
Gold's Channel for the Past 6 Months
July 8, 2020 - (Gold Market Wire) - Gold has made it through $1800 with little fanfare, after flirting with the overhead resistance line and finally breaking through. Now is a good time to step back for the big picture look - to see where the next resistance might be encountered and where length could be added. We'll pull back for a look at Gold's primary channel from the beginning of the year.
Since the start of the year, the primary channel has delivered some 20% of gains within a six month period - although not without the big March madness - which violated the lower parameter. Now, as we reach the top of the channel, the temptation to chase the strength and hope for a huge move becomes even greater. Those with length will be tempted to add to the position, but we favour lightening up by a small amount (20-25%) as we get to the upper boundary and trying to find a re-entry point to add sheded length if we move back into the lower part of the channel charted here. If we don't get it - well, we can always ride the balance off into the sunset.
Gold has proved itself to be in a strong bull market. Of that there is no doubt. But trading a Gold bull means always trying to avoid leveraged buying into strength. Aside from the "untouchable" core position which must be held with an iron grip, the trading position needs to be balanced and reasonable. Scaled down buying on pullbacks is the key - adding incremental length with each drop and avoiding margin like the plague. If the market gets seriously strong - and it already is - the discipline level will have to heightened even more and size will have to be tempered further.
Those that have been long since the first five years of the milenium, and have weathered, with patience, the "storm" from 2012-16, are now receiving the first rewards for their patience and dedication to their belief in a secular Gold bull market. There are many such rewards soon to come, over the next 2-4 years.