December gold has given us a wild ride in the past 5 months, trading between 1430 and 1180, for 250 an ounce. Spurred on by world events from Egypt, to Syria, to the political theater in Washington, DC, we’ve seen gold equally punish both bulls and bears whose timing was less than perfect.
Speaking from personal experience , we were stopped out of good short positions last time we were short at 1422, and then stopped out of longs from 1309 the week we had a panic flush down to 1251. I wrote about these both times.
A lot of folks only talk about their winners, but I write this mostly for myself, so its more of a diary of my ideas, for better or worse. So that being said…. Here are two trades I like for the next 10 to 14 days.
Looking at the daily chart, you can see the trading range we’ve had for the past 5 months.
We have returned to the 38% retracement level… 1338. I believe that this is a low which can be used to establish long positions against. I am looking for Dec gold to take a run back up to 1375 which was the late August high. Right now as I write this we are at 1351… that would be a 25 dollar an ounce winner per contract if you bought at this level.. With a mini contract, that’s 33 dollars a tick. 10 ticks in a dollar move. $330 per dollar, this is a good risk reward .
If we take out that 1338 level , you’d have to have stops below, to prevent holding it back down to 1250.. That’s the ultimate downside risk and that’s too big of a nick to take if you are being reasonable, in my opinion.
Finally, as we go home here on Friday, we’ve had November options expiration in the grains. Beans settled right at 13.00. The recent high was 18,, There is an upside target I like between 21 and 25.
Because of this, I believe its a good risk/reward to buy here; risk 7 cents, and look to take that 20 cents to the upside.
