Sometimes knowing when not to trade is as important as knowing when to trade.

When prices are trending there’s money to be made. But when the action gets choppy and moves mostly sideways… it’s best to “sit on your hands” and wait for the market to pick a direction.

The chart below shows daily gold futures since 2009. You can see the steady uptrend turned volatile after gold peaked late last summer. Since then gold has gone up (some traders gained 17%)… and down (some traders lost 20%). Yet net price movement since the beginning of August is flat.

I’ve mapped out the battleground and found the prices where gold bulls and bears will next fight it out.

If gold breaks above $1,800 it will complete a reverse head-and-shoulders pattern. This would suggest higher prices, with gold retesting $1,900 at a minimum and possibly making new highs.

Otherwise, if gold breaks below the $1,550–$1,600 range, a Fibonacci retracement level and past the zone of support, we could see a significant drop follow.

The zone between these prices is “no man’s land.” Here, we sit, wait and watch.

 

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Adam O'Dell
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.