Gold as represented by the GLD in the chart below has closed below the 50 day moving average, which excites the Bears. Although gold could simply continue down here, we have to askwhat could support a rally on a technical basis?
Have a look at the chart courtesy of Worden Brothers, Inc. at FreeStockCharts.com:
KEY TO CHART (from top to bottom):
GREEN LINE: Resistance at last high.
RED LINE: Immediate resistance above the current price represented by both the up trend line in WHITE as well as the 50 day moving average in YELLOW.
YELLOW LINE: 50 day moving average
WHITE LINE: Up trend line
BLUE LINES: 1st is current consolidation support line and 2nd is a deeper level of support represented by a prior low.
CONCLUSION: GLD is going to move out of the consolidation range bounded by the RED and highest BLUE line in the chart. When it does, you’ll likely see a clear move either UP or DOWN. Note that the 50 day moving average and the up trend line are pretty much coinciding right now. A close above those would be BULLISH.
The likely target of an UP move would be the last highs while a DOWN move would take us to at least 130.13, which is the lowest blue line on the chart.
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The charts were produced by FreeStockCharts.com which is a registered trademark of Worden Brothers, Inc., Five Oaks Office Park, 4905 Pine Cone Drive, Durham, NC 27707. Ph. (800) 776-4940 or (919) 408-0542. http://www.Worden.com.
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