Why I’m looking for opportunities to go short

Gold, the euro and the Dow have all rallied to significant technical levels. But where will they go next? John C Burford looks at the charts to find out.

With the euro summit announcement now out of the way but with the awkward details yet to emerge the vigorous rallies in all three of my markets have reached important milestones.

I thought I would briefly set out my trading ideas today with a fuller email tomorrow on one of them.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

I never cease to be amazed at how often the Fibonacci levels (available on all spread betting platforms) act as support and resistance.

If you are new to trading or wish to have a refresher, see my video tutorial on this topic.

Advertisement - Article continues below

And now, in all three markets, the rallies have carried to significant Fibonacci levels, more or less at the same time, thus illustrating how connected the markets are connected by waves of liquidity.

There was a time when gold moved opposite to stocks, but not today.

Here are the charts of gold, euro and the Dow as of this morning:



(Click on the chart for a larger version)

The euro:


(Click on the chart for a larger version)

The Dow:


(Click on the chart for a larger version)

Advertisement - Article continues below

In yesterday's post. I showed that gold had hit the 50% retrace level. And this morning, the 2/3 level in the Dow and the 62% level in the euro have been hit.

Isn't that pretty?

Also, perhaps co-incidentally, the Dow and the euro have reached round-number levels (12,000 in the Dow and 1.40 in the euro) this morning.

What now?

Now, with expectations high that the euro crisis has been solved, sentiment has gone from being ultra-negative a month ago to very bullish today. Also, I have noted that bullish articles on stocks and the euro have mushroomed recently, so I am looking for tops.

As you know, I have been deeply suspicious of these rallies, as they have been built largely on hope. The real' economies continue to have problems and at some stage, there has to be a reckoning.

Advertisement - Article continues below

Either growth will take off, thus justifying stocks valuations, or the market will re-adjust to reality.

As a trader, I see very overbought charts, and am waiting for my tramline, Fibonacci, and Elliott wave methods to give me reliable trading opportunities and I still favour the short side!

If you're a new reader, or need a reminder about some of the methods I refer to in my trades, then do have a look at my introductory videos:

The essentials of tramline trading Advanced tramline trading An introduction to Elliott wave theory Trading with Fibonacci levels

Don't miss my next trading insight. To receive all my spread betting blog posts by email, as soon as I've written them, just sign up here .



Spread betting

Boeing's share price plummets: here's how to play it

Boeing shares have fallen by a third this year. But there could be worse to come. Matthew Partridge explains how traders should play it
10 Feb 2020
Share tips

How my 2019 spreadbetting tips fared

Matthew Partridge reviews performance of his 2019 spreadbetting tips. This year’s winners include Bellway, JD Sports and Taylor Wimpey.
17 Dec 2019
Spread betting

Betting on politics: some safe Labour bets

Matthew Partridge outlines a few flutters on what should be safe Labour seats in the general election.
10 Dec 2019
Spread betting

DS Smith will deliver: here's how to play the share price

Packaging group DS Smith is profiting from the online retail boom. Matthew Partridge explains how traders can play the share price.
3 Dec 2019

Most Popular


Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
Investment strategy

The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price ex…
11 Feb 2020

Money Minute Monday 10 February: lacklustre growth in the UK and Europe

Today's Money Minute looks ahead to the week's GDP growth estimates for the UK and the eurozone, plus inflation figures for the USA.
10 Feb 2020

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019