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Welcome all Safety in the Market traders to this month’s dedicated newsletter. Talk about things being on the move, we have had Stock Indices continuing to push up, the Aussie and Euro Dollars continuing their up trends and of course, Gold has been going through the roof. This month I want to share with some of my work on Gold futures that builds upon stuff I started showing over a year and a half ago.
The basis of the work I’m going to share with you here is Pressure Point theory from your Road Map Chart. The only twist is we will be using it on a very big picture basis. The extrapolation of this theory into a Price Forecasting technique is one of the clearest examples of where something David Bowden is teaching you in the Smarter Starter Pack, grows into so much more as you continue to develop.
Let’s get straight into a chart. Chart 1 is the month chart of Gold (GC-SpotV) for the entire history of futures prices contained in ProfitSource. All ProfitSource users have access to this data, one of the big pluses for those of you have stepped up to using this program.
Chart 1 – Monthly Gold – Major Ranges Pressure Point Projections
click chart to enlarge
To quickly recap what I shared with you previously. The last major bull market for Gold ran from 25 August 1976 ($100.0/ounce) to 21 January 1980 ($873.0/ounce). This gives us a reference range of $773.0. I have been projecting this range from the 16 February 2001 low ($255.1).
As you can see the 17 March 2008 high ($1033.9) came in basically right on the 100% Pressure Point for the repeat of the $773.0 reference range. Gold prices reacted strongly off this point and for a while I wondered if Gold was going to go higher. The test was always going to be if it broke back through that 100% Pressure Point. I’m on record as saying that if it did, then Gold is going to go much higher and that’s the way things have played out.
Taking a look at the market action since breaking back through the 100% milestone you can see where in December 2009 I have marked the reaction off the 125% Pressure Point. Now that really starts to make this range projection super interesting from a forecasting perspective. We seem to have a strong Road Map of price pressure.
So that leaves us with the next stop along the way as the 150% Pressure Point which is $1,414.6/ounce. The calculations for that value is $255.1 + ($773.0 x 1.5) = $255.1 + $1,159.5 = $1,414.6. I believe it is important to know how ProfitSource gets these figures.
For the Platinum students there is quite a deal of ‘Time’ elements I could share with you to help add to time to this price, so I may get the chance to cover some of that with you in upcoming Platinum Newsletters. For everyone now, here is a very strong price to watch and a clear case of ‘Hindsight becoming foresight’.
Clearly this price target has two-fold trading opportunities. The first being trading into the forecasting and the second is trading out of it. At the moment pull-backs in Gold should be seen as yielding potential buying opportunities. A word of warning though, things could be pretty volatile over the next few weeks if the target price is approached. That’s the nature of market movements around turning points. I’m pretty fired up about this opportunity and it is my pleasure to share it with you.
Until next month...
Noel Campbell
Professional Derivatives Trader
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