Consolidation Triangle, S&P TSX Global Gold Index

This is a classic pattern that I always watch for and I was surprised to see such a fine example on Thursday. I was not trading, being the Thursday before the Easter long weekend I had a little too much to keep me occupied at work. I was able to jot down some of the prices that I would have entered at as the market unfolded so I will list those after the chart.

S&P TSX Global Gold Index:


The setup from the previous day was a downtrending afternoon with a short rally into the close which did not break the 200sma. So, from my journal "Expect a drop off the start similar to yesterday and rally to 200sma. If price crosses the 200 immediately, HGU, if not perhaps a momentum downmove, HGD, for a small target, tight stop, or wait."

Well, I wasn't far off the mark as my "prognosis" covered the two most likely outcomes. I waited rather than considering the immediate trade for the downmove...even though I was not trading for real I use the same thinking as if I were. If the price does not do what I expect then it is time to re-evaluate and watch for another setup given the new data.

First trade as the price tested yesterday's low, which held, so HGU. Second trade at 1000h as the price reached for, and did not attain, the 200sma... short or HGD. Next trade was long again, HGU as the price again tested the same low price, it held. Back to short, HGD.

Now, the apex is always interesting as the price normally breaks one way or the other for a decent target at least, this day it knocked me out as I had two active simultaneous trades when it faked a break up, then headed down. I even entered a long trade as the fake out tested the 200sma.

The final trade was as the 200sma caught up to itself at 1250h (200 minutes into trading) and the moving averages converged with the monthly S1 pivot in a general downtrend. Super high probability trade to the downside with two or three decent entry points.

HGU trades for the long plays:
0947h Buy $10.58 Sell $10.85 Gain 27 cents ps Return 2.5%
1025h Buy $10.58 Sell $10.72 Gain 14 cents ps Return 1.3%
1054h Buy $10.63 Sell $10.71 Gain 8 cents ps Return 0.7%
1200h Buy $10.73 Sell $10.69 Gain (-4) cents ps Return (-0.3%)

$ 0.45 gain per share or 4.2% overall return on trades

1000h Buy $8.42 Sell $8.55 Gain 13 cents ps Return 1.5%
1048h Buy $8.47 Sell $8.55 Gain 8 cents ps Return 0.9%
1105h Buy $8.53 Sell $8.53 Gain 0 cents ps Return 0.0%
1245h Buy $8.53 Sell $8.70 Gain 17 cents ps Return 2.0%

$ 0.38 gain per share or 4.4% overall return on trades

Overall this played out as well as I would expect.

Jeff.