Gold Still a Seller’s Market

We’ve written ad nauseam about the bearish case for gold.

The 30-year commodity cycle has peaked…

Fed printing isn’t causing inflation…

Investors are looking for income, not metals…

All the while, I’ve told you to sell into rallies. And today’s a perfect time to do that.

Here’s a chart of gold futures, showing a classic example of how significant market levels – support and resistance levels – tend to work.

See larger image

The saying goes, “Support, once broken, becomes resistance.” And often, these levels tend to appear at round numbers.

Since April, $1,350 has been the make-it-or-break-it level for gold. This is the price at which gold initially found support after dropping $200 per ounce in two days!

After a brief rally – a mere dead cat bounce to $1,450 – gold rolled back over and retested the $1,350 support level, which held as prices dawdled sideways for about a month.

Then, on June 20, gold fell through $1,350 like a rock down a well. By June 28, gold futures were trading under $1,200 per ounce – the downside target I established for gold when it first fell under $1,550.

Now, after drifting higher through July, gold futures are trading back up to this all-important $1,350 level. While $1,350 acted as support before, it’s likely to act as resistance now. That makes it a great time to get short gold.

With current prices around $1,320, place a stop-loss order $40 higher, at $1,360. This “hides” the stop above the $1,350 resistance level.

If gold breaks through $1,350 to the upside, quickly ditch this short position and wait for another tactical entry opportunity.

As far as profit potential goes, gold should easily fall back down to re-test $1,200. That puts $120 of profit potential under the current price, or three-times the amount we’re risking… a la, a reward-to-risk ratio of 3-to-1.

Of course, we see gold dropping much further than $1,200. So take this guidance one of two ways… it can be a quick, short-term trade or a great place to get short for the long haul.

Either way, gold remains a seller’s market. Buyers beware!

Harry Dent’s Most Disturbing Prediction in Years

Harry Dent, one of the most respected economists in the industry, has uncovered a disturbing market event that could soon devastate millions of investors. In short, he has undeniable proof that one of the market’s safest and most popular investments is about to get slaughtered… and it will have dire consequences for those who don’t prepare right away.

For full details on the event Harry’s dubbed as the “Safe-Asset Slaughter”… and to ensure you escape the coming carnage, I urge you to watch this special presentation.

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Categories: Markets

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.