The Gold roller coaster ride continues and Gold has now sold off from its high on August 28th of $1434 per ounce, down to $1304.60 on Friday Sept 13th. Evidently Gold didn’t like Friday the 13th! How are investors supposed to make profits in these volatile markets when Gold drops over $130 per ounce or almost 10% in about two weeks, ouch! The answer is embracing the volatility and learning to trade the markets as we discuss every week in our market analysis.
So is Gold Finished Rallying? This week’s chart looks familiar as it is the same chart we shared last week however the price of Gold has dropped and has now entered one of our Bear Trap areas. We’ve discussed Trap areas many times but just to make sure everyone understands this important concept we’ll describe a Bear Trap area again. This is an area where price breaks below a previous low aka support. When price breaks lower than this support area buyers who entered higher up “paid top dollar” finally panic out of their position due to experiencing a large loss. These areas have a high probability of selling exhaustion due to everyone who wants or needs to sell doing so leaving more buyers than sellers. This imbalance of buyers outnumbering sellers will cause price to rise again just as the majority of investors/traders who paid top dollar panic sell out of their positions.