A new trading week, so to speak. There are no new trades to report. We will speak of the progress of the open trades, or the lack thereof.
SSO: this ETF represents the upside of the S&P 500. Remember that this is a double up exchange traded fund i.e. the S&P advances 1%, the SSO jumps 2%. Terrific, unless it goes the other way. But that is why we ALWAYS use protective stops.
The high today was $119.90. The trailing stop is therefore anchored $16.04 below the high. It has moved up with the price.
UGL: This ETF represents the upside of Gold. I made a mistake with this one: I didn’t wait for it to close above resistance and then place the order just above the high of the candle that closed above resistance. That doesn’t mean it can’t be a good trade. It is just that it can often bounce around if you get in too soon. You need to understand the power and importance of resistance and support to be a consistent trader.
The drop in price today didn’t stop us out, but it was within pennies of doing so. If we were to turn the UGL chart upside down, we may say a trade going the other way.
Let’s take a look at the inverse of UGL.
GLL represents Gold going down in an ETF. We can see above that the price has closed above the 21 EMA (blue), but the blue is below the 55 EMA (green), indicating a down trend.
We can swim against our trend because the ROC has closed above the 0 – line.
We, however, have significant resistance represented by the black, upper horizontal line – position 1. I have started this line at the upper part of a falling window in candle chart terms – a gap in western terms. That gap represents a zone of resistance. The ‘all-hope-is-lost point is the upper part.
Not really all hope is lost. I need the price to close above that line and then to place a stop-buy just above the high of the candle that manages that feat. The protective stop will go just under the lower horizontal line – position 2.
Other symbols of interest: UDN is in a similar boat. Resistance is at $19.08.
TBT: Resistance is at $16.01.
In both cases I need to see the same close setting as with GLL.
Essentially, I need the market to confirm matters – as much as that is possible when trading.
You can scroll down through the weekly round up charts to see them. If they trigger, I will show the chart and the details.
If you have any questions or comments, please drop me a line: firstname.lastname@example.org