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Trading Gold Update 2013-01-14

I've been trading gold the past two weeks. Well, actually I've been in one gold trade that I initiated on 2012-12-28. Click the link for the trade entry in this futures trading blog. Its a longer-term trade based on the idea that we will see a rise in gold prices over the 2013 year.

I will be providing an update for that trade and stating my sentiments regarding gold prices right now. I will be using two charts to demonstrate this, one daily chart and one weekly chart. The weekly chart that I am using is from Barchart.com. I really don't like to post charts from other websites like this.

Barchart is very good because they have a lot of indicators, including COT which I use. If they ever stop providing 3-line COT graph indicators, I will stop using barchart. Another great feature about barchart is that you can sign up for an account, for free, and then save chart settings for the futures products you trade. This will allow you to log in from your smart phone when you are out-and-about and log into your save charts and get a 10 minute delayed data chart of whatever futures product you want to look at. I do this all the time and find it invaluable. 

Anyways, I've been long in gold since December 28, 2012. My entry price was 1666 in the December 2013 contract. The charts I'm showing below are for the front month, February 2013. As a result, prices in these to charts are about 10 points below the prices in the contract in which I hold my position.

Let us observe the daily chart for February 2013 Gold futures.

daily gold prices chart
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First, the orange circle indicates my entry point. Second, the red line along the MACD is demonstrating a nice MACD divergence. Things are just looking better and better for this trade. At the point I bought, the MACD was only in the histogram. But with the last two lows made after the fiscal cliff crap at the beginning of January we have seen a very very nice MACD moving averages price divergence. 

To me, this just looks very very bullish and is confirming my original trading gold sentiment. 

In addition, we have seen two semi-dramatic attempts at new lows over the past two weeks. Both of which have not managed to hold their lows. The future is still cloudy, but I am pleased with my positioning at this time. I do, however, keep a stop-loss order placed. I am keeping my order WELL BELOW recent price lows. I do not want to get stopped out of this trade.

Let us look at the weekly chart from Barchart.com for February Gold prices.

weekly gold prices chart
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What we are seeing in this chart is more confirmation that things are looking good for an upward price dynamic.

We are seeing prices hold around the moving average. Prices have been a little bit volatile because of the fiscal cliff jazz, but all-in-all as of yet, prices have held this moving average very well. 

The fact that prices are holding on the moving average AND forming the MACD divergence on the daily chart keeps me optimistic this trade will work out over the multi-month time frame.

In addition, I am still seeing bullish signs in some fundamental data that I follow in this market from a multi-month perspective time frame.

**** Jan 14, 15:40 edit/addition:

Ben Bernanke's speech today seemed to indicate that he wants the US debt ceiling lifted. This sounds like a recipe for more QE (quantitative easing). This, in my mind, is longer term bullish for gold and supports my bullish perspective. I am happy about this, but never the less am keeping a close eye on this market for a signal to exit in case of an error in judgement.

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