Gold futures pressed above $1,000 an ounce on Friday, February 200, 2009, but have stalled out a bit since. The April contract was last down $10.40 at $984.60. Lind Plus Senior Market Strategist Richard Ilczyszyn said the chart of April gold appears to be shaping into a bullish pennant, which could suggest an upside breakout after a period of consolidation. However, he said today’s price action is key. To set up for a possible upside breakout, watch for an “inside day,” that is, trading within the prior day’s highs and lows at $999 and $976. “We get these breakout trades, hit stops, then see profit-taking,” Richard said. Inside days typically suggest market consolidation, and some indecision before the next move. If you are interested in setting up a bullish position on this pullback, he recommends buying three April mini-gold contracts at $980, $970 and $960, with a stop at $949. Risk about $2,100, then look to sell on new highs.

Richard said if the market breaks yesterday’s low, the prior day’s low, and closes below those levels, then it’s likely the market will cycle down. But right now, the chart isn’t showing that. Richard said support comes in at the 21-day moving average of $930, and the 50-day moving average at $885.

Richard Ilczyszyn is a Senior Market Strategist with Lind Plus. He can be reached at 800-605-0095 or via email at rilczyszyn@lind-waldock.com.

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