I am still not sure that we are out of the woods for a selloff in the metals, but with GLD above $135 it seems less likely. In fact the $130 level looks a little like a double bottom to me. You can see where GLD touched $130 in early November then gapped and shot up to to its all-time high of $139.15. It fell promptly back to $130 which proved to be strong support. I would not consider abandoning this trade until the $130 level is breached with force. So, why are my stops at $132.50 and $130.50? The short answer is because I don't want to wait until support is broken. For the longer answer take a look at the 10 day chart in the 15 minute time period.
You can see all of the gaps and noise above $130 support. To me $131 looks like the strongest support on the chart. That explains the stop at $132.50. The reason for the stop at $130.50 is because a stop below that is too risky. We have no control over what the market does, but we have complete control over what we do in response. Mitigating risk is the only way to play this game.
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