Gold Tests Its Reversal Level: Third Time's a Charm

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The point where there is the highest reward, with the lowest risk, is the third test of an important reversal level. Gold is undergoing just such a critical third test right now, and it's doing that just above the massive $675 energy level that defined the whole last phase of the bull market.

It took many years of study and analysis - and untold hours of staring at market fractal patterns - before I had one of those special "eureka" moments about the way markets behave at critical reversal points.

Although it's easy to lose sight of this, the main goal of any speculative endeavor is to figure out the point with the maximum potential return on capital, combined with the minimum potential risk to that capital.

In my opinion, the point where there is the highest reward, with the lowest risk, is the third test of an important reversal level.

Gold is undergoing just such a critical third test right now, and it's doing that just above the massive $675 energy level that defined the whole last phase of the bull market.

The upside is enormous from here, while the downside can be kept well under control, as a definitive breakdown to new closing lows would not be good in this situation, and would require immediate action to close down positions.

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