The easy part of this long trade is over, and we have taken profits off the table. Congratulations! Actually, let me emphasize that thanks to not only entering the long position itself, but actually by re-entering short positions higher, we are gaining even more than it seems at the first sight – so, congratulations once again!
And yes, I think that re-entering the short position in the GDXJ is now once again justified from the risk to reward point of view.
Is this the final short-term top? I don’t know. If it isn’t, I think that the top is not far.
But that’s not the right question to ask.
The right question is whether the risk to reward ratio already supports a short position – and in my opinion it does!
At the moment of writing these words, the GDXJ is trading at $35.02.
So, to clarify, in my opinion, opening a regular (100% of the regular position size) speculative short position in the GDXJ is justified from the risk to reward point of view. Some might want to use JDST or other leveraged instruments for this trade, but taking on leverage is definitely not for everyone.
I will provide targets for the GDXJ and for leveraged ETFs (as well as supplementary ones for gold and silver) in tomorrow’s regular Gold Trading Alert.
I will also most likely increase the size of the short position in the following days – stay tuned.
I’m not using stop-loss levels for this trade (I’m paying attention to many other indications other than price and I will close the position if the risk to reward ratio no longer supports it, regardless of the price), but if you want to use them, feel free – it’s your capital, and you decide what to do with it.
Again, congratulations!
As always, we’ll keep you - our subscribers - informed.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief