7 out of 9 Winning Trades and Counting!
That's right, since the 1st of January 2019 this system has pulled in 7 out of 9 winning trades!
The rate of winners over losers currently stands at an unbelievable 77.78% for the year and it's about to get better... News from the market indicates our most recent trade is set to take off.
Factor #1: Global demand for gold is net long which will help the rally
Last month gold prices dropped to their lowest levels for the year at $1,265 per ounce.
This short term drop to the downside was due to short covering (investors closing their positions) and investors taking profit from the continuous rise since 2018.
Now we’re seeing buying taking place, as it has bounced off the low and has already reached $1,285 per ounce. This clearly tells us that there is an attraction to buying gold at these price levels.
Even Brian Lan, MD at dealer GoldSilver Central, said: "This trough has helped reinstate some physical demand for gold"
And one of the largest derivative trading companies, IG Markets, have indicated that global sentiment indicators are showing that traders are 73% net-long gold at these low gold price levels.
With demand picking up to buy the gold metal, this suggests that the supply (selling pressure) is slowing down which gives investors and traders the sign that the gold price will rise from here.
Factor #2: The US is looking to cut interest rates in 2019 which will encourage buying
Investors have eagerly waited for the start of the FOMC (Federal Open Market Committee) meeting on 1 May 2019. The decisions that are made at the FOMC, will determine the future fate of the interest rates in the US as well as the 'safe haven' assets.
There is a strong chance that the US Federal Reserve might drop interest rates in 2019.
This is based on recent data that showed inflationary weakness.
With a cut in interest rates in the US, this will put pressure on the US dollar and bond yields. This will then make the gold price in dollars cheaper for holders and investors of other currencies, which will increase the appeal to buy non-yielding assets such as gold.
Even analyst Helen Lau of Argonaut Securities said,
“Some investors are wanting to switch out of equity markets into the safe-haven asset class”
Factor #3: When gold touches this level - buyers go crazy
Before we get to the chart analysis where I expect gold to head next, we need to talk about another major technical indicator.
It's called the 200 Moving Average. This line is watched by countless investors and traders all over the world.
The 200MA is a key indicator that helps determine the overall long term trend.
Basically, when the gold price is above the 200MA (Yellow line) the trend is up.
In the above chart you can see that in 2018, when gold touched the 200MA it made new yearly highs in February.
And today, it looks like gold is about to do the same.
When the gold price touches the 200MA, we could see a whole lot more buying, which will be a major technical catalyst for its next rally in price.
So where can we expect gold to head next?
You could be one step ahead of the average investor every time you make a decision
Look around you. Taxes are rising, independent, unbiased financial advice is disappearing, and mis-sold pensions and equities are taking their toll on people’s savings. In any given year, less than 20% of the more than 800 unit trusts in South Africa beat the market for their investors. So much for the abilities of ‘experts’.
Now more than ever, due to the current economic landscape, it’s only those with access to specialised knowledge and expertise who will really prosper in 2019 and in years to come…
Factor #4: Why $1,346 is on the cards for gold
Looking at the weekly chart, since October 2018, the gold price has been forming a Falling Wedge.
The chart above shows you two parts that confirms this.
1. A rising flag pole (green uptrend line)
2. A falling wedge (two parallel downward constricting pink lines)
During the time the gold price has come down or consolidated, this has given technical analysts the signs that buyers are starting to buy back into the market, where we can soon start to see higher prices form.
Now the price has reached 3/4s of the apex, this means a break out to the upside is imminent.
Once price breaks above the wedge pattern, we can use top Top-Down calculation to see where the gold price is heading next.
The top of the Falling Wedge is at $1,298 and the bottom of the wedge is at $1,250.
Let's plug these numbers into the Top-Down formula.
Price target = (Top – Down) + Top
= ($1,298 - $1,250) + $1,298
Once the gold price breaks above the $1,298 level (above the ceiling level) the next price we can expect gold to hit is at $1,346.
How you can profit from the rise in gold
Either you can go long (buy) gold CFDs and hold until it hits the target of $1,346.
Or you can wait for my SMS
where I'll tell you where to buy and trade gold stocks i.e Anglo Gold, Harmony or even Goldfields which tends to go up when the gold price rises.
“Wisdom yields Wealth”
Analyst, Red Hot Storm Trader
If you have any questions about getting started with Red Hot Storm Trader
or have any trading questions in general, feel free to email me at email@example.com
and you’ll stand a chance to be featured in the next Trading Tips