December 7th, 2009 by 
Here’s a Gold trade update for 12-07-2009 as a follow up to my recent post here: U.S. Dollar Trade Update 12-02-2009.
In the previous post I was writing about potential contrarian trades if the U.S. Dollar was possibly making major or minor lows.
For Gold trades, I had a chart of GLD and showed how prices had broken out of two pattern formations within the last several months, and that if the U.S. Dollar was over-extended to the downside, and Gold was over extended to the upside, looking at these with contrarian views were compelling.
Here’s the updated chart of GLD. I’ve added a Fibonacci retracement grid overlaid on the chart. You can see that the initial move lower Thursday and Friday from last week, declined to the first 38.2% Fibonacci price level and bounced a bit higher before ending the week.
As I mentioned in the U.S. Dollar Trade Update 12-06-2009 yesterday, a bounce higher before moving any further lower is possible. Although as I’m writing this, Gold is trading lower after rising briefly in the overnight session.
I still feel that with all of the people short the U.S. Dollar and long Gold, and continued pressure against these positions make cause a panic, or rush, to continue to reverse these same positions.
For stock traders, I included a chart of DZZ in previous posts, which can be traded easily in the typical stock traders brokerage account. Here’s the updated chart which shows the nice 10% – 15% move higher in less than two days since I posted last Wednesday evening about using this as a possible contrarian play:
Those of you that know a little bit about me, know that I am primarily a very short term trader. Having a 10% – 15% gain in two trading days would probably make me take my gains and wait for another entry point, or possibly be willing to raise a stop loss to break even here with such quick gains.
At the very least, raising a stop loss to break even after a 10% – 15% gain in two days would be wise.
While I can’t and don’t, recommend any stocks or specific trades, I do try and post my trading ideas on this website even if I don’t have any position in the trade mentioned. I usually get too tied up with other things and writing. I don’t have any position in any of the stocks mentioned in this post, nor have I over the last few days.
