GLD, our trading proxy for gold, closed Thursday just above its 20 day moving average. In premarket trading today GLD is about 20 cents below its 20 day moving average.
No, we’re not pointing that out so you see a bunch of 20’s in a row. Though if they were US 20 dollar bills that could be good.
We point that out because the “major” simple moving averages – 10, 20, 100, 120 and 200 day – tend to act as support and resistance levels, especially near tops and bottoms of waves. Yesterday’s action sorta looked like gold was checking to see if it had found a bottom. Early morning action today seems to suggest the answer to that is No.
So a smart trader would either short gold, or at least not buy any. Smart traders wait until they see a bottom, then enter when they see signs of strength AND a good risk-reward situation setting up.
That doesn’t look like it’s gonna happen today.
The Gold Enthusiast sold his DGP yesterday and will look for another entry point when he sees the conditions above.