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How to Trade Gold Bullion and Gold Stocks Using Bullish Percent Cycles

Commodities / Gold & Silver 2009 Apr 19, 2009 - 07:51 PM GMT

By: Chris_Vermeulen

Commodities

Best Financial Markets Analysis ArticleSo many people want to know how to trade gold and to be honest, if your patient enough to wait for a buy signal and low risk setup then trading gold can really pay off with only a few trades. This report shows a couple charts which I follow to help time my trades. My trading model allows us to trade any sector but I prefer to trade gold and oil because of the accuracy which they have provided in the past.


Trading with the Bullish Percent Index (BP)
The BP chart is great for finding overall trends in a sector. I focus on the trend and try to find patterns/cycles to help time pivot points for trading gold and gold stocks. Each sector has its own cycle length so do not try applying the same cycles to different sectors.

The chart below clearly shows the gold miners BP chart which has been in a strong up trend since December. The current cycle has just turned up for the gold index indicating we could see higher prices this week.

Gold Miners Bullish Percent Index

The Gold Bugs Index (Gold Stocks)
Trading gold stocks is a very exciting and profitable niche to trade. I have traded many other sectors and the top two sectors I specialize in are Gold and Oil (energy).

Trading using technical analysis is my strong point. I combine multiple time frames, trend lines, momentum, commitment of traders (COT) and several other inter-market relationship trading vehicles. After analyzing this information very accurate trading signals can be generated.

Trading gold stocks using a proven trading model and risk management helps to keep trading signals black and white taking the guess work out of trading. The chart below shows that gold stocks are near a support level and when you combine this with the BP chart above which just turned positive I know I can start looking for some potential long positions in gold of gold stocks if we do happen to get a strong reversal to the upside.
Trading Gold Stocks using the bullish percent index

How To Trade Gold (GLD ETF)
Gold is currently trading at a pivot point and will most likely make a sharp move higher or lower from here. This has many traders on edge right now. I prefer to stay in cash during times like this and jump on the wagon once a direction has been confirmed and I have a low risk setup.

What makes this a pivot point?

  1. Currently at the December highs which could act as support
  2. Gold has formed a Head & Shoulders pattern and broken the neck line
  3. The current pull back looks like a simple ABC retrace before moving higher
  4. Gold is currently trading at the 200 day moving average which could be support

How to trade gold bullion and gold equities with the bullish percent index

How To Trade Gold & Gold Stocks – Trading Conclusion:
Learning how to trade gold and gold stocks can be done very easily if you know what to look for and have patients. I don’t trade gold every week but that’s what I really like about my trading model. It’s simple and I don’t have to be glued to the computer every day.

I can quickly look at the charts and know if I could have a potential buy or sell signal with a few days. If I do then I watch the charts, if not I focus on answering my members trading  emails and look for other possible trades in other sectors like the Nat Gas and Russell 2000, etc…

As you can see from the charts above gold is at a crucial pivot point and only time will tell before we know where gold is headed. Once we have a direction I will be looking for a low risk setup which is a trade with less than 3% downside risk for putting our money to work.

If you would like more information on my trading model or to receive my Free Weekly Trading Reports - Click Here

I have put together a Recession Special package for yearly subscribers which is if you join for a year ($299) I will send you $300 FREE in gas, merchandise or grocery vouchers FREE which work with all gas stations, all grocery stores and over 100 different retail outlets in USA & Canada.

If you have any questions please feel free to send me an email. My passion is to help others and for us all to make money together with little down side risk.

To Your Financial Success,

By Chris Vermeulen
Chris@TheGoldAndOilGuy.com

Please visit my website for more information. http://www.TheGoldAndOilGuy.com

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.

This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.  

Chris Vermeulen Archive

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