Gold often gives traders a second chance to get into position right before a rally. But, it’s rare to get a third chance.
So, traders should take advantage of yesterday’s decline in the shiny, yellow metal and buy the dip.
You see, when we looked at gold three weeks ago, we noted it had reached an “extremely oversold” level. Technical momentum indicators like the Relative Strength Index (RSI) and Commodity Channel Index (CCI) had dipped toward their yearly lows (click here to check out our new free resources page, including our glossary and training videos).
And, the previous two times that happened, gold made an important intermediate-term bottom within just a few days.
Gold was trading at $1,868 per ounce three weeks ago. It closed at $1,924 per ounce on Monday.
But, yesterday’s decline knocked gold back down below $1,900. And, it’s giving traders a second chance to get into position before a year-end rally.
Take a look at this updated chart of gold…
The vertical blue lines on the chart indicate the three times in the past year when gold reached “extremely oversold” levels. In all three cases, the price of gold bounced immediately. But, each bounce was short-lived – and gold eventually dipped back down again – giving traders a second chance to buy.
The dashed red lines point to those “second chances.”
Anyone who missed the chance to buy gold at extremely oversold levels – last November and March – got a second chance to buy before the metal rallied 15% and 33%, respectively.
Gold reached extremely oversold levels again last month. Traders who bought back then are already up a bit on that trade. But, yesterday’s dip has given anyone who missed that trade another chance to buy gold.
Traders should take advantage of this second chance. We’re not likely to get a third.
Best regards and good trading,
Jeff Clark
P.S. Even during a pandemic, I didn’t follow the panic or hype. Instead, I followed this simple strategy using 3 stocks I knew could give me triple-digit gains – in a matter of days. It’s a method I’ve relied on all throughout my career, and it even helped me retire at 42.
My Jeff Clark Trader Masterclass teaches everyday folks how they can make money quickly… under any market condition. The markets will always move up and down, but that doesn’t mean you can’t get rich from it… and I’m here to show you how.
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Reader Mailbag
In today’s mailbag, Jeff Clark Trader Masterclass member, Peter, shares what he likes about Jeff’s training…
Thanks for what you do! Keep it up! I like your methods, using low calculated risk, with simple statistical methods to guarantee success. Also, I like your sharing of life lessons via anecdotes.
– Peter
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