XAU at 4 Standard Deviations below 200 DMA

You won't pick the exact bottom on this sell-off, so don't wait for it, thinking you will. The way to play this is to decide on how many shares you ultimately want to buy, and start to build a position.

For example: You want 200 shares, pick an ultimate stop price, and start buying 50 shares at a time. Each time the price goes below your previous purchase price buy 50 more. When you have 200 shares , stop buying. If your ultimate stop price is hit at any time, sell.

Also, decide how and when you will exit if you have a profit. Just remember, bottom fishing is expensive.
 
I agree with you 100%. Adding small positions makes sense in this kind of environment.

This could qualify as a black swan event for the XAU since a level of 4 standard deviations below its 200 day moving average is such a rare event. The last period of time the XAU was even 3 standard deviations below its 200 day moving average was about 10 years ago, on 8/31/98 when it was 3.06 standard deviations below its 200 day moving average.

Based on historical data back to 1994, the XAU rarely spends too much time at 3 standard deviations below its 200 day moving average. It tends to close the gap within a short period of time.
 
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