Based on today’s decline in the mining stocks (significant strength of which was an important bullish factor, as discussed in today’s first alert) and a visible breakdown below the rising support line, we think that the existing long positions should be closed (regardless of whether they are profitable or not - we wrote about this long position when gold was at about $1,049 and we wrote about doubling it with gold higher than it is above, so depending on one’s approach to this trade, it could be profitable or not). The USD Index moved to 97.30 or so today and gold didn’t rally (in fact it declined), which is a significant bearish sign as well. This - along with action in mining stocks - pushes the risk to reward ratio into an unfavorable territory. While the risk to reward ratio was favoring long positions until today’s session (and each alert listed reasons for that), this is no longer the case.

Consequently, we think that long positions are no longer justified from the risk to reward perspective. If we didn’t have an open position now, we wouldn’t open it. This implies that the currently opened position should be closed.

Whether or not a speculative short position is justified or not at this time is a different matter and we think it’s best to wait until the markets close to decide whether to open such positions or not.

As always, we will keep you - our subscribers - informed.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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