Another Way to Play Gold—But Use Caution!
10/09/2009 12:01 am EST
Ultra Gold ProShares (UGL) - This double-leveraged ETF seeks to replicate, net of expenses, twice the performance of gold bullion as measured by the US dollar afternoon fixing price for delivery in London.
On September 2, at $38.54, I said, "UGL is at the apex of a very long right triangle. The heavier volume on the buy side, as well as a Moving Average Convergence/Divergence (MACD) indicator that is very close to a buy signal, leads me to conclude that UGL will break through the top with a trading objective of $40."
My prior target has not only been met, but exceeded, with a major high-volume breakaway.
Targets now are difficult to measure, but traders who are willing to take a risk could still enter positions with tight stops.
Futures technicians say that the next resistance for spot gold is at $1,070 a troy ounce, which could result in a new target of $55 plus for UGL.
By Sam Collins of OptionsZone.com