Timing the Trade the Wyckoff Way Message Board

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Strategies & Market Trends : Timing the Trade the Wyckoff Way

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To: coferspeculator who started this subject	4/13/2004 6:11:03 PM
From: coferspeculator	Read Replies (1) of 14340

The XAU experienced an upthrust on 4/1 indicating the probable test of the lows of Feb. and March. The potential cause built up shows a potential move down to 82. A major impediment to this move has been the support level that has existed for most of this year that began with a selling climax in January. Today, the XAU experienced a failure to the downside on very wide spread and very high volume. So far this year the supply has been absorbed at this support area. Short positions should have been taken at the upthrust. Adding new short positions at this moment offers risk for a couple of reasons. The above mentioned support could well provide the opportunity for a spring to develop. An upthrust and a spring are contradictory events. It's either one or the other. A second reason is the possibility of a terminal shakeout. Taking a short position in face of either a spring or TS would find one covering at a potential loss. A third reason is the that many of the gold stocks are oversold at this moment A better place to take an additional or new position would be on the LPSY that would follow a possible SOW that would occur in one of two ways. The first situation would be a weak rally back from the current close. If a spring hasn't occurred a short could be initiated on weak rally. The second situation would be a rally back to the ice level. For this to occur, the XAU will need continued high volume and wide spread to the downside through the support level that currently exists. The subsequent rally needs to be on weaker volume with decreasing spreads. If this occurs, this would provide a good entry with a likely attempt to fulfill the count to the 82 level that has been identified on two occasions, the recent upthrust and an earlier LPSY in January. The recent support level is an important support area and if penetrated significantly will become an important resistance and ice level. While a potential 10% move in the XAU index is significant, many of the gold and silver stocks would provide much greater potential. That's where the focus should be.

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