Adami: Gold Price Offers Buying Opportunity

By Guy Adami, Stocks Editor at OptionMonster.

So we have tried to help navigate the gold trade for you folks. We started off saying to wait until gold broke its technical "pennant" trading formation that we had outlined a number of times. And, lo and behold, it did just that to the upside and immediately rallied $15.

From there, the commodity tested and retested the support level of that pennant pattern at least three times, bouncing nicely in every single instance. Then as gold moved through $925 we began to talk about leaving "trailing stops" on any existing long position. That strategy has served us quite well because, for every $10 gold would rally, it seemed to sell off $2 or $3.

Last week we broke through the $1,000 level, a price point that we had not seen since last summer. The bulls came out in force and, frankly, they may still be right. However, we started talking about the potential for a bearish "double top" chart formation.

If you have been listening to our Starting Line call each morning, you know we talked about taking off at least half if not all of any long position you may have had in gold. We did that while emphasizing that you can ALWAYS get back in. This is a trade where you want to be ahead of the pack, not behind it.

Yesterday gold fell some $25 and may turn out to be a huge buying opportunity. If you have been following the strategies we have outlined all along, your "powder" is dry enough to be able to make that decision on your own without having to worry about adding to an existing position.