Selling Gold

We noted on Monday that there were two price levels that would be attracting attention in Gold. On the topside it was the $1020 -$1030 level…..and on the downside it was the $979 level. See our post from Sept 14. Well two days or rapidly accelerating price action took us up a briefly through the $1020 level. We will take our chances here and put on a short position. We are a bit late with this posting as we sold Gold this morning at $1018 (current bid at $1015.70), but we would now use a Sell Limit at the same level ($1018) as we expect a lot of intraday volatility through this morning.

Our Stop Loss level is up at $1027, and our Take Profit level is $993. We think this trade will take a few days to shake out. As a confirm, we are looking to see the price level in Gold this afternoon at the CME gold-mini closing time of 17:15 EST. Below $1020 will give us a better confirm that the stops have been run on the top and that Gold may drift lower in coming days. We do not think it will be a sharp sell-off.

Note that we are still bullish Gold in the long term This short term position is created by a combination of our technical analysis and our experience on a dealing desk. Dealing desks are those market makers that truly rule the global capital markets in the short run and that is why we sometimes put out our “Think Like A Dealer” postings. Understanding the psychology of market takers (aka: clients) is imperative to successfully trading on the sell side.

Next up…..our EUR/USD position. We first noted that we wanted to go long EUR/USD on July 20 and placed our trade on July 30 at 1.4059. See our previous postings at www.backbayfx.com/blog.php. Since then we darted in and out around one of the NFP numbers successfully, but other than that we were long the pair and have hit our target of the 1.47xx handle. This morning we hit our target. We reduced our position by half and are re-assessing.

Our instincts are that EUR/USD will move SIGNIFICANTLY HIGHER in the coming months towards the end of the year. But for now we tend to our half position and think about our next action.

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Comment by selling gold

2009-09-17 13:15:16

Thanks for the information, very helpful

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