Gold closed today at 1785, nearly breaking the R4 level and just 15 points shy of what will be some difficult resistance at 1800.
What makes the 1800 R5 resistance level so significant first of all is that it is a nice big round number. Don't laugh.....traders like to run assets to round numbers. The main thing that makes 1800 significant is that it marks significant resistance dating back to October 2011. It is the final barrier from where the price of gold is today and the all time high of $1923.
So I have a plan that I think will be the safe way to trade gold at this important juncture. I am suggesting we exit all of our metals positions once gold reaches 1799. I can place stops on the gold but I would need to be ready to manually exit silver and platinum once those gold stops get triggered.
The 1800 level will probably make it easy for the banks to defend because there will be a lot of willing sellers (like us) who will probably be stopping out once the price of gold reaches that level. I could see price drop back down to the 1750 level which will be near the 10 DMA. We could try going long at that time and ride it back up.
If I am wrong and the price of gold blows through 1800, then we could get back in and ride it the rest of the way to 1923. With our leverage, I just think this will be the prudent way to trade. Lets capture our profits and see what happens. I will be exiting ALL metals positions, not just gold.
If you do NOT like the plan please let me know. If I don't hear from you I am taking you out.
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