Although we have seen stocks jump around the past few days precious metals have held strong with very little volatility. This is because of the economic fears looming for the US and other countries of possible financial collapse. This fear is helping to boost gold and silver prices because they are seen as the safe haven. Also we are seeing money move in the US dollar because the country is still seen as a leader in many ways helping to boost the US dollar.
Below are a couple charts on Gold and Silver ETF's showing the end of last years rally and the correction in prices which are now looking to setting up for another leg higher.
GLD - Gold ETF Trading Vehicle - Daily Chart
I called this chart "The Golden Correction" because it literally is. We saw prices rally late in 2009 finishing off with a parabolic spike which we know is not sustainable and almost always results in a VERY sharp drop. This correction unfolded as planned with an ABC retrace which shakes out weak positions. We then we saw a reverse head & shoulders pattern form which again also shakes out weak positions. Once the neckline was broken from the reverse H & S the new up trend was started providing a couple trading opportunities for us along the way. The most recent low risk entry point can be seen on the chart as gold prices dropped back to a key support level.
Gold Futures Price - 60 Minute Day Trading Chart
Gold has been showing some very bullish price action the past week forming several mini bull flags with confirming volume levels. I think we should see gold pop another $5-10 bucks in the very near future if not continue higher for several days.
SLV - Silver ETF Trading Vehicle - Daily Chart
Silver formed much of the same patterns as gold but with much more volatility. Also silver has yet to break the 2009 high which is surprising but with a large part of silver being use for industrial purposes it does make sense as the economy is not as strong as it was thought to be in 2009. Silver carries much more risk when trading because it has more random moves and increased volatility.
Mid-Week Precious Metals Trading Conclusion:
In short, gold and silver are in an uptrend and looking strong. Both are currently trading at short term resistance levels on the daily chart which has caused them to stop moving up today (Wednesday May 26th) but on an intraday basis they look solid and could break though these resistance levels.
That being said buying way up here adds a lot more risk because a good chunk of the move has already been made and if prices do roll over and start heading back down the next support level is several percentage points away for placing a protective stop with the proper amount of wiggle room.
If trading Gold, Silver and Index Futures and ETFs interested you check out my trading services at www.TheGoldAndOilGuy.com
Chris Vermeulen
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Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris' uniquely consistent investment opportunities that carry exceptionally low risk and high return.
Please visit my website for more information.
First of all, let us go through once more what exactly is MACD crossover. When the MACD line cuts through its trigger line southward, you are seeing a bearish crossover. When the MACD line cuts above its trigger line, you are getting a bullish crossover.
Here are how you can make use of the crossover to trade reversal:
1) Look for Reversal Candlestick Pattern: The best way to trade a reversal is to be able to find reversal candlestick pattern on your chart. You should look out for patterns such as railway track, evening or morning star, hammer and hanging man etc.
2) Set up Oscillator Indicator: There are a few indicators that are used as an oscillator and they are Stochastic or Relative strength Indicator (RSI). If you are getting a bullish crossover, you will enter a trade if the oscillator is oversold. If you are seeing a bearish crossover, you should enter your trade if the oscillator is showing a sign of overbought. Using either the stochastic or RSI can help to increase your odds of winning.
If you are tired of entering a trade and then find yourself getting stopped out frequently, this is when the MACD crossover can be useful. It can be used as a tool to help you prevent being stopped out due to fake out which is very common in trading.
Whenever you have a breakout or just simply a trend line break, you should always look at your MACD as a way to confirm the breakout. If there is a breach of trend line but there is no crossover on your MACD indicator, you are likely to be seeing a fake out. However if you have a breach of trend line together with a crossover in your indicator, you are likely to be experiencing a valid breakout.
The above is how you can make good use of your moving average convergence divergence indicator to help you in your trading.
Hope that you find this post useful to you and look out for more useful posts that I will be writing in future.
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Kelvin is basically a full time forex trader. Before getting into the field of forex trading, he used to work as a process engineer in a multinational company. he was introduced to this field by one of his friend who had also quit from day job to be a full time trader today.
Please visit my website for more information.
E-Mail: forexkel@forexindicator.org
Website: http://www.forexindicator.org
In this post, I will go through how I actually trade with MACD divergence and how you can make use of it to form a trading strategy for yourself. If you are not sure about what divergence is, you can look at my previous post "Forex MACD Indicator Explained" and I will now go through the steps on how you can profit from the divergence.
The MACD divergence is a very powerful phenomenon that you can trade with. However you need to understand that the divergence works well only when there is a trend as MACD divergence is an indication of a upcoming reversal.
Here are how I trade the divergence myself:
Step 1: You have to make sure that there is a trend in action for the currency pairs you are trading. The best way to identify a trend is to use several moving averages. First, you plot a 20 EMA, 50 EMA and a 100 EMA moving average and see if they are stacked nicely in a nice manner. If they are stacked nicely with good angle and separation, it is a good indication of a trending market and if the EMAs are flat and mixed, there is no trend in the market.
Step 2: Observe the MACD and the price to look for divergence.
Step 3: Look for good reversal candle patterns like railway track, hammer and hanging man.
Step 4: Draw a trend line and wait for breakout.
Some of you may think that how can it be so simple? In fact, the most profitable trading strategy is one that is simple and not sophisticated.
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Kelvin is basically a full time forex trader. Before getting into the field of forex trading, he used to work as a process engineer in a multinational company. he was introduced to this field by one of his friend who had also quit from day job to be a full time trader today.
Please visit my website for more information.
E-Mail: forexkel@forexindicator.org
Website: http://www.forexindicator.org
Its timing is awful. Its fate is uncertain. Yet its sponsors felt it had to be done now.
While the Gulf of Mexico is being damaged by a runaway well, spewing millions of gallons of oil-like bile from hell, any energy bill has the chance that it will be amended to become an anti-energy bill and will fail when hoped-for Republican support evaporates.
At present there is fairly wide industry support for the Kerry-Lieberman bill, particularly from the electric utility industry. Leaders of the industry and its affiliated groups, like the Nuclear Energy Institute, were in on the writing of the bill. Tom Kuhn, president of the Edison Electric Institute, and Jim Rogers, president of Duke Energy, stood shoulder to shoulder with Kerry and Lieberman when they announced their bill.
The three pressure sources driving the bill are:
- The November elections and the desire of endangered Democrats to show that they have done something about climate change and have tackled long-term energy problems.
- The Environmental Protection Agency plans to start regulating carbon dioxide as a pollutant next year, if Congress does not act.
- The environmental disaster in the Gulf, and its effect on public attitudes to energy development and energy companies
The bill differs from the House bill, passed last June, which emphasized cap-and-trade to control carbon emissions; although both bills introduce carbon restriction by sector over time, and could be reconciled in a House-Senate conference committee, according to Chris Holly of The Energy Daily.
The carbon-reducing provisions in the Senate bill not only rely on pollution credits but also a wide range of incentives, including carbon capture, enhanced subsidies for nuclear and alternative energy.
The bill's original intent was also to give a boost to offshore drilling, thus pleasing Republicans and the oil industry. But the Gulf disaster has changed that. The bill as introduced now contains language that will allow states to prohibit drilling off their shores-a potential killer of nearly all new leasing and exploration. And drilling is pushed 75 miles out to sea.
Just weeks ago, the bill looked as though it could pass the Senate with support from at least one Republican, Sen. Lindsey Graham of South Carolina, one of the original authors. But Graham withdrew when Senate Majority Leader Harry Reid, D-Nevada, said he would put immigration reform ahead of the energy bill.
While Sen. Mitch McConnell, R-Ky., the minority leader in the Senate, has come out against the bill, Graham still likes it but believes its chances of passage are slight. Kerry still believes Graham would vote with the bill, giving the Democrats that essential 60th vote, if the Democrats all stick together, which is unlikely with the bill's nuclear and offshore leasing provisions.
A more likely result is that the bill will open old debates about big energy, like oil and nuclear, and pit it against alternative energy, mostly wind.
Comment on the bill has come slowly, as interest groups calculate the political alignment and realignment that the bill will bring about.
Offshore drilling gets more politically toxic as each day of failure to contain the situation in the Gulf passes. Nuclear gets more dubious as cost calculations rise. With or without legislation, the smart money is turning to natural gas for electrical generation and interstate trucking. At present, gas is cheap and plentiful.
There is a lot of money-$2 billion-in the bill for carbon-capture and sequestration, but this is ill-defined; and the idea of pumping millions and millions of tons of carbon dioxide into the earth remains a legal nightmare and a hard sell to some environmentalists. Clean coal, it seems, can never be pristine.
Here, then, is a bill for all seasons. Actually, more of a manifesto: an election manifesto.
Source: http://oilprice.com/Energy/Energy-General/Gulf-Spill-Puts-US-Energy-Bill-on-Slippery-Slope.html
By Llewellyn King in Washington DC for OilPrice.com who offer detailed analysis on Crude oil, Natural Gas, Geopolitics, Gold and most other Commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com
It can tell you the current situation of the market by using its upper and lower band.
Whenever the market has low volatility, the bands will be narrow and whenever the market has high volatility, the bands will be wide.
Bollinger Bands Example
In this blog, I will not be going through the various sophisticated mathematical calculations for the individual tools as I find them totally useless as most forex platform that you are using is able to automatically help you plot them out.
Here is the structure of the Bollinger bands
1) The upper band - which is showing you the simple moving average + 2 x standard deviation
2) The lower band - which is showing you the simple moving average - 2 x standard deviation
3) The Simple Moving Average (SMA)
Bollinger Bands Explained
How to Setup Your Bollinger Bands
Personally, I always stick to the default setting for my Bollinger band which is the 20 days SMA and plus minus 2 x standard deviation for the upper and lower bands.
However you can also adjust the setting if you find the price constantly penetrating the upper or lower bands.
What Bollinger Band Can Do For You
The upper band usually indicates a resistance level while the lower band usually indicates a support level. If you take a close looks at your Bollinger band. You will find that the price usually bounce off the Bollinger band whenever it touches the upper or lower band.
With this observation, you can use the upper and lower bands as support and resistance when planning your trade.
Besides using the upper and lower bands as the support or resistance, you can also make use of Bollinger bands to help you measure the volatility of the market.
When the upper and lower bands are narrow, you are actually in a period of consolidation and when the bands are widely apart, you are in a period of strong price movement. In my next post, I will show you the various uses of forex bollinger bands in trading and how you can make full use of its feature to help you in your trading.
If you are interested to find out more about other indicators like the Forex MACD Indicator and how to trade MACD divergence, you can take a look them in this blog.
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Kelvin is basically a full time forex trader. Before getting into the field of forex trading, he used to work as a process engineer in a multinational company. he was introduced to this field by one of his friend who had also quit from day job to be a full time trader today.
Please visit my website for more information.
E-Mail: forexkel@forexindicator.org
Website: http://www.forexindicator.org