How to Use Technical Analysis to Maximize Your Gains Presented by Peter Krauth

Moving Averages Moving Average: average of security’s price over set period or time, measures momentum 50-day moving average: Blue Line, action of last two months (last 50 trading days) 200-day moving average: Red Line, action of last nine months (last 200 trading days) Golden Cross (bullish): short-term moving average breaks ABOVE long-term moving average (mid-September), but that was a late indicator, Gold had reached $1,775 (upward price action was very fast) Bearish Cross: short term moving average crosses BELOW long-term moving average (mid-April), this was better predictive timing than the Bullish Cross in September On Dec. 13, Gold dropped to $1,688, which was a good level to add We could still see Gold drop to near $1,650, and the 200-day moving average would help support it One strategy traders use is to buy the FIRST HALF of a position once the price crosses 50-day moving average on upside, then the SECOND HALF of a position when the price crosses 200-day moving average on upside

Higher Lows, Higher Highs Southern Copper Corp. (NYSE:SCCO) bottomed in mid-May around $26, and started a reversal upward Started a series of higher lows, and higher highs (late May onward), finding support at the 50-day moving average line This is a bullish development that projects an ongoing climb When SCCO pushed above previous resistance around $30 (early August), this can be considered a breakout, since it had peaked there several times before (late Feb., early May, three times in July) Right now, SCCO could drop to $35 and remain above its support at the 50-day moving average If we saw a pullback to $35, and it stayed above that level, that would make a good entry point

Support and Resistance Support: level at which price is supported from falling lower: BLUE line Resistance: level at which price resists pushing higher: RED line Key because when have a “break out” below or above these levels, especially on strong volume (see September), can signal a trend change Sometimes upper Resistance line can become new (lower) Support line: BULLISH SIGN For example, if we begin to see Aurcana Corp. (TSX.V:AUN) consistently trade above $1.05, could become new Support However, we also see a potentially new support line forming now around $1.00 (see GREEN Line); each time it dips below that, it tends to pop back up quickly. Buying at or just below $1.00 is looking like a good level to buy or accumulate Aurcana

Bullish Flag (within uptrend) Gold peaked in Sept. 2011, began consolidating in Bullish Flag pattern (within an uptrend) Formed a series of lower highs, but found SUPPORT at the $1,550 level BULLISH development, forecasting a likely breakout once triangle nears its formation (right hand side) We got that breakout in mid-August, which is also when the strong Seasonal Trend starts each year for Gold Gold finally “popped” above $1,625 to run up to $1,675 (mid-August), then upward again to $1,775 (by early Oct.) Can see potentially a new Bullish Flag forming since early Oct. If Gold can push above $1,725 and maintain that, it could signal an upside breakout and new leg up, likely to happen within weeks Buying or Accumulating gold, use the Sprott Gold Trust ETF (NYSE:PHYS), which looks good when gold is trading between $1,650 and $1,700

Rising Wedge Rising Wedge is a Bearish technical formation IMPORTANT: Top Line and Bottom Lines are both RISING Microsoft exhibited this type of behavior from late May into late September We need to watch for a break of the lower line in the forming triangle Microsoft Corp.’s (NasdaqGS:MSFT) 200-day moving average appears to have provided support within that wedge Once the support was broken on downside, MSFT bounced just above 200-day moving average, but couldn’t maintain that level, and began trading Below the 50-day moving average, a clear downward trend Once MSFT price went below the 50-day moving average and bottom of wedge, traders would have been looking to start selling Once MSFT price went below the 200-day moving average, traders would have intensified selling Drops below the 50-day moving average, the bottom of a rising wedge, or the 200-day moving average are all levels traders use to consider selling, and aggressive traders may even want to short the security

Falling Wedge Falling Wedge is a Bullish Technical formation IMPORTANT: Top Line and Bottom Lines are both DECLINING Fortuna Silver Mines Inc. (NYSE:FSM) is exhibiting this type of behavior since a few months We need to watch for a break of the upper line in the Falling Wedge A sustained push above $4.60 level, where the upper line currently ends, would be a bullish signal From that point, the next target would likely be the 50-day moving average at $4.90 If FSM could push above $4.90, and hold that level, the next target would likely be around $5.50, the previous significant high of late Oct., then late Nov. A push above the upper line of the Falling Wedge would be a significant move that would likely excite traders From there, a push above the 50-day moving average, the 200-day moving average, and previous significant highs are all “trigger points” which would help to confirm a new uptrend, and get traders increasingly excited.

Golden Staircase Golden Staircase is a term I coined a few years ago, as I was studying the long term price chart for gold, it struck me I noticed there are “bursts” to new highs, followed by long consolidations, then after enough time digesting, those highs form a new “STEP” in a “GOLDEN STAIRCASE” Once that STEP is later surpassed, it typically is no longer breached to the downside This is not a hard and fast rule, notice peak in Dec (blue line), price was surpassed in summer of 2009, but then dropped below the Dec peak by fall of 2009 The same thing happened with the next peak in Dec (2nd blue line), which was surpassed in the spring of 2010, this time a temporary drop below, and a turnaround and surge upward once again Right now, we’re in the formation of a new Large Step, top is at $1,900, once that’s surpassed good chance will hold, expect that will happen by next spring, perhaps with a surge to the $2,000 level. If that plays out, we may be looking at an 18% gain in gold from here, more for PM stocks! My target for 2013 is $2,200 or 30% higher from here!

SUMMARY Moving Averages: Help define short and medium term price trend, 50-day & 200-day are most popular Look for Golden Cross and Bearish Cross Higher Lows, Higher Highs: Strong bullish signal. Look for support areas, like moving averages, as buy levels Support and Resistance: Horizontal lines which “contain” a price for awhile. Look for breaks below Support and above Resistance for a change in trend, can signal time to Sell or Buy Bullish Flag: Formation which portends an approaching breakout as price nears right hand “tip” of flag. If flag is within an uptrend, breakout is likely upward Rising Wedge: Bearish signal, look for breakdown below bottom of wedge, moving averages may be key levels Falling Wedge: Bullish signal, look for breakout above top of wedge, moving averages may be key levels Golden Staircase: My own term to describe the price action of gold since its secular bull started back in Look for previous peak to become the next “step” in the chart, likely to become Support level.