We have bounced off the top rail of our bullish rising wedges on the HUI and the XAU after trying to break thru for 5 days. It looks like we are in for one more reversal to the bottom of the rising wedge. This is not unusual at all as many consolidation patterns end up with 6 reversals points within the congestion area. What I am watching is the bottom rail and how we interact once we get down there. I’ve been watching the markets for many years and know from first hand experience not to fight a pattern that is fully developed and our rising wedges on the HUI and the XAU are fully developed. As long as we stay above the bottom rail, our team will have the ball and we can go on the offensive again. On the other hand if they can push through our support line we must get on the defensive and protect our core positions. soee has the right idea about buying some put protection IMHO if the bottom rail gives way. When we have a well defined consolidation area, as we do now, it is easy to keep it simple. As long as we stay above the bottom rail no action is necessary. On the other hand if we break through the bottom rail then it will be time to become defensive and some puts on the core position will help ease the pain until we get to the next bottom. Nothing hard or complicated, just playing the game to win.
All the best…Rambus
bobd.pngbobx.png