gold charts - tag category postings

The gold price has a habit of doing these long slow consolidations and putting everyone to sleep when they should be sitting on the edge of their seats eager to buy with both hands.  It also seems to get the beginning of big moves going on slow days of the week (Friday or Monday or near holidays) when a lot of people are not paying as close attention as they normally would.

I am bringing up the GLD ETF again because if the GLD is able to trade with a full price bar above the 114 level then in my opinion it warrants a confident move into the bull camp again.  However anything below that is still too risky.  Gold also has a habit of rallying up to previous swing trading ranges and then falling apart.

So 114 and higher on the GLD tells me it is time to jump in with both feet into either the GLD or the DGP ETF (the gold double long ETF).  The condition is that the GLD must continue to hold above 114 from there onward.  If the GLD is strong enough it will hold above that area and any pullbacks will be slight enough to keep it from falling under the 114 again.

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I have tried in recent months to come up with bearish reasons why the gold bull market is ready for a pause and a long 2 to 3 year corrective consolidation.  Certainly I think it is reasonable for one to expect a 2 or 3 year consolidation in the gold price given that it has been going UP in very persistent fashion since 2001 ?

But despite my desire to come up with a bearish outlook, the tape action as shown in the GLD ETF is voiding those conclusions at least for now.

Gold looks surprisingly bullish to me right now and the GLD ETF may be getting ready for another massive leg up.  The correction of the last few months has been orderly and not catastrophic.  Price has held reasonably well.

Most recently we see from the yellow shaded area on the chart that the GLD has initiated a 2B buy signal, a short term bullish sign.

In addition the GLD has managed to break up and out of the downtrend that has been defined by the solid downward slanting downtrend (solid blue line).

However the GLD still remains within a congestion zone defined by the 105 and 114 levels.  Despite the early bullish signs, this is still a dangerous congestion zone that can trap new commitments very quickly.

For me to get pounding my fists on the table bullish on gold and the GLD ETF, we need to see the GLD trade with conviction above 114 level.  Above there and it is time to go long gold aggressively again in my opinion.

In the short term the US dollar index looks somewhat toppy, so that could support the GLD moving up to 114.  But whether or not we get a break through remains to be seen.

The confusion comes in when we look at the longer term chart of the US dollar index which still has potential signs of higher trending prices.  If you look at the long term price chart of the US dollar since 2001, it is hard to get very bearish on it again given how long it has been going down and also now that it has done a sloppy double bottom off of a large base.  However the double bottom in the US Dollar index is not really confirmed unless and until the dollar is able to trade much much higher from these levels.

So regardless of what the dollar does, the key still remains the 114 level on the GLD ETF.  If broken decisively, it should open the door to an eventual move to 140.

I just thought I would let everyone know that any thoughts I have about the gold market (gold price, gold mining stocks, or gold mining indices) will be done over at LetsGold.  I just felt that gold is an important enough topic that it deserves it’s own forum.  So again go over there to hear my latest thoughts on Gold.

The gold market is a peculiar type of market since I have been watching it from 2003 onward.  It tends to have big spike up rallies but then big retracements only to be followed by another big spike up rally.  It is also a small market compared to most others and at least so far I have noticed that the mainstream public does not appear to be fully participating in this market in any meaningful way yet.

So there should be lots of interesting things to come in that sector going forward from a technical perspective as well as from a grand public perception perspective and investor psychology as well.

Perhaps you have heard the term ‘gold bug’… those devoted followers of gold who have a real passion for the sector and to a certain degree turn it into a religion.. I do not fall in that camp, at least not yet.  Any time one mixes fervent passion for a market it just seems like it is an accident waiting to happen.  Better just to jump along for a ride in anything, whether it be real estate, tech stocks or gold and then jump ship before everyone else does.

We are here to make money, take money and then go home. That’s it end of story.

So again all gold discussion from now on will occur over at letsgold dot com, not here at bestonlinetrades!