Gold Respects Fibonacci Time And Price Parameters
Monday, December Gold (GCZ2)
ran right up into the Fibonacci resistance zone we identified last week in this
column. It was looking like Gold might ignore the price resistance as well as
time cycles for a potential high. But mid-day on Monday we got a reversal to
the downside with more follow through on the southbound track today. If this
high put in sticks, then the first area of support will be down around 310.00-313.00.
In fact, if I’m trading the December contract I would look to lighten my position
around this level and trail my stop loss. Then with the portion of the trade
that is left, I have an objective of 293.50, which is the 1.272 extension of
the two step pattern into the Fibonacci resistance zone. You can get the visual
on the chart below.
Of course, for the “stock-only”
trader, the gold stocks I mentioned last week will definitely move in a similar
fashion. Below is a list of gold stocks that might be a good play off of the
futures. The table lists today’s close and net change for the day versus yesterday’s
close. As you can see, today’s movement in the underlying metal translated to
anywhere from 3%-9% moves in these gold stocks.
So, I would follow the December
Gold Contract as I trade these stocks. Use the guidelines above. For example:
If I’m short NEM and gold hits the 310-313 support zone. I’ll take partial profits
and trail my stop. Then if gold hits 293.50 I would completely exit my NEM short
position. (just an example of course)
| September 10, 2002 3:00p Central |
|||
| Ticker | 9/10/2002
Close |
Net
Change |
%
Change |
| GFI |
$13.20
|
($1.27)
|
-9%
|
| GG |
$11.15
|
($0.35
|
-3%
|
| HGMCY |
$16.10
|
($1.56)
|
-9%
|
| MDG |
$19.35
|
($1.23)
|
-6%
|
| NEM |
$28.46
|
($1.22)
|
-4%
|
The flipside of this entire
story is that Gold now reverses to the upside and violates our price resistance
and time parameters. This would be an extremely bullish sign. In fact, in the
Wave world this would change the current wave structure from an A-B-C corrective
pattern (into resistance) to a wave 3 of a 5 wave advance to the upside.
Good night!