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We look at a chart of the gold price (in US dollars). It’s trying to make its way higher into new all-time-high territory but is struggling to get going. While the big picture is good, we show pullback targets for any correction in the interim. We also look at Remgro, one of the most solid and consistent stocks on the JSE. It’s moving up after a recent correction. Corrections in a stock such as Remgro have historically been good buying opportunities.
GOLD (US$) – OVERBOUGHT
Trend: Up, but short and medium term overbought.
Strategy: Tighten stops/sell short on a close below line 3.
* The gold price broke out of a channel (lines 1 and 2) in February. Since then it’s moved sideways. There are growing signs of a correction to come before more upside.
* One such sign is the relative strength index (RSI, on top). It’s giving a negative divergence from its overbought level. That’s warning of a correction to come.
* While the long-term trend is still up, short-term players should tighten their stops to a close below line 3 support (US$1 400). A close below $1 400 will also be a sell short signal for traders.
* That will set up a drop to line 2 and its rising 200-day moving average at $1 325. But lock in partial profits at $1 365 to reduce your risk. A correction will set up a good buying opportunity. The next upside target is $1 530.
* If the short signal triggers, place your stop as a close above $1 422 (spot price).
REMGRO – ANOTHER RALLY STARTS
Trend: Short term sideways; medium term technically down. Long term up.
Strategy: Traders buy on a pullback.
* After getting close to line 1 support (of a broadening formation with line 2) Remgro has rallied from its 200-day moving average (which provides loose support). It’s now broken out above line 3 resistance. Any pullback towards line 1 will be a buying opportunity.
* The daily stochastic oscillator (on top) is moving up from its oversold region and has more upside to go before becoming overbought.
* Traders buy it ideally on a pullback to R107 or lower (the closer to R105 the better). Take trading profits in the R113 to R114 zone.
* It’s a “hold” for investors. Historically, Remgro has been a very defensive stock during large market corrections.
* The initial stop-loss for traders is a close below R104,50.
Please note: For more recommendations and charts by the author on shares, stock indices and commodities please go to www.themarket.co.za.
GOLD (US$) – OVERBOUGHT
Trend: Up, but short and medium term overbought.
Strategy: Tighten stops/sell short on a close below line 3.
* The gold price broke out of a channel (lines 1 and 2) in February. Since then it’s moved sideways. There are growing signs of a correction to come before more upside.
* One such sign is the relative strength index (RSI, on top). It’s giving a negative divergence from its overbought level. That’s warning of a correction to come.
* While the long-term trend is still up, short-term players should tighten their stops to a close below line 3 support (US$1 400). A close below $1 400 will also be a sell short signal for traders.
* That will set up a drop to line 2 and its rising 200-day moving average at $1 325. But lock in partial profits at $1 365 to reduce your risk. A correction will set up a good buying opportunity. The next upside target is $1 530.
* If the short signal triggers, place your stop as a close above $1 422 (spot price).
REMGRO – ANOTHER RALLY STARTS
Trend: Short term sideways; medium term technically down. Long term up.
Strategy: Traders buy on a pullback.
* After getting close to line 1 support (of a broadening formation with line 2) Remgro has rallied from its 200-day moving average (which provides loose support). It’s now broken out above line 3 resistance. Any pullback towards line 1 will be a buying opportunity.
* The daily stochastic oscillator (on top) is moving up from its oversold region and has more upside to go before becoming overbought.
* Traders buy it ideally on a pullback to R107 or lower (the closer to R105 the better). Take trading profits in the R113 to R114 zone.
* It’s a “hold” for investors. Historically, Remgro has been a very defensive stock during large market corrections.
* The initial stop-loss for traders is a close below R104,50.
Please note: For more recommendations and charts by the author on shares, stock indices and commodities please go to www.themarket.co.za.
