The simple answer is no one knows. All markets go into different phases, the basic three are congestion, breakout and blowoff. The pattern that torments traders and investors alike is the congestion phase, also known as the greatest time of uncertainty.
Consolidation brings the most amount of frustration to everyone, which then causes carelessness within the investing and trading community. When markets consolidate, the best position for everyone is patience, if you are in the market there is nothing to do, if you are not in there is no reason to enter. This is the mental side of trading, too many try to guess what the next move will be instead of allowing the market to breakout in one direction or the other.
The most successful trades and investments come when traders and investors are trading with the trend. As we look at the metals, Gold is solidly in a congestion phase and has been since early April. Silver and Platinum go back even further in the same painful pattern. Because we are mechanical traders, always in the market either long or short. However, although we remain long all, our preference would be to wait until the market committed to one side or the other.
Until proven otherwise the trend is up, we remain long and will stay there until we reverse. The one rule to always remember, its better to wish you were in a trade then to wish you were not.
Todd Horwitz Chief Strategist BubbaTrading.com
Stop being a prophet and make profits
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