, Gold's About To Move - Which Way? Here's my chart...

HI ,

Norman Hallett here from The Disciplined Trader.

Gold made a 10% move higher when the stock market was on the
skids a couple of weeks ago.  

Uncertainty in global markets and the weaker dollar were both
responsible in concert for the surge.

Well, the last couple of weeks have seen a major rally in equities
and less concern in overseas markets... plus the dollar has regained
its stregnth.

But gold has not yet backed off from it's gains.

Instead, it's formed a dream formation for a trader... a pennant.

See the daily chart of April Gold below...

With a pennant, you're supposed to wait until it breaks up or
down out of the formation and go with that direction.

But I'm writing this email to you for one other reason...

MANY TIMES, a break out or break down occurs out of the
formation for a day or two and then dramatically reverses in
the other direction for an extended run.

So the way I play it is to go with the initial break direction 
and then take profits on half my positions at the completion
of the first or second bar out of the formation.

Then I put a stop in place so that if the market reverses and 
back into the formation, I get out of the remaining positions at
break even or near break even.

If the market continues in the original break direction, then I'm in
half-speed and I'm OK with that.

But, if the market breaks in the other direction... I take that
new direction with a lot more confidence.  There is a very
high probabilty this is the true direction.

NOTE: This technique just worked well in the Silver market.
If you look at the May Silver daily, you'll see break down last
Friday and the reversal seems to be happening back into the 
pennant.  Wait and see there, too, now.

That's it for now... just want to lay out that caution about 
pennants leading to whipsaws many times.

YOU HAVE TO BE PATIENT.  If you are, there may be a
nice profit ahead in gold.

And, as always... Stay Discplined!

My best,

Norman Hallett, CEO
The Disciplined Trader (need a trading plan?  Try this)

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