Gold Target

While there have been many factors leading to the conclusion that gold would correct to below the October 08 lows, the breakout in price today was undeniable. That, coupled with the clearly bullish seasonal pattern in gold, argues that the bearish argument was wrong. But trading is not about being right or wrong, at least successful trading. It is about evaluating the trend and using any number of methods to position oneself with it.

Over the past few months, I have used my price based rules coupled with gold sentiment and dollar analysis to position myself for a downside breakout. At first it was not clear that a triangle would develop, so there was no reason to abandon the trade. Later, as the triangle came clearly into focus, the only question was which way it would breakout. Since there was no way of knowing, I maintained my position. Today that stance was proven incorrect. So I immediately sold my remaining short gold position in the DZZ and reversed to go long in the DGP.

That was all there was to it. I hope gold continues to climb to its projected target, but if it doesn't, if it breaks down below the wave E low, then there will only be one action to take.

The only thing that is bothering me is whether or not the DGP will still be in existence by the time gold hits its target, which should take about 4 months. For those who are not aware, Deutsche Bank will close the DXO ETN as of September 9 and buy back all outstanding shares. Surely, there are more such changes to come.