Saturday, June 6, 2009

A Trade In The DGP


As gold turned up from its April lows, I took an initial 1/2 position in the DGP just above the first valid pivot. I then added 1/4 position just above the high each successive valid pivot to complete the position. I exited when gold closed within the zone of its previous high week. This is not a requirement, but the combination of seasonal patterns and a potential turn in the dollar made it a reasonable place to take profits.
A basic fractal buy pivot requires a high with two lower highs on either side. I typically also want to see a higher sell pivot on the right side of the buy pivot to show that the trend is advancing, but at least no penetration of the sell pivot on the left side of the buy pivot. These are general guidelines. Each situation demands its own analysis.
I am now 1/2 short using the DZZ. A valid sell pivot has not formed, however, the failure to hold up in the zone is enough reason to expect a correction.

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