logo
  Join        Login             Stock Quote

Gold: Don't Change The Channel

 October 24, 2011 02:03 PM


I believe there are two simple indicators to watch on gold (GLD) for projecting it's next long-term move.  The first indicator has been highly predictable since late 2007.  It is the upward channel that gold has traded in for almost the entire period since 2007, with one recent exception.  When gold went "parabolic" in August, it traded outside the bounds of this channel.

Gold subsequently sold-off as hard as it went up, falling back within the channel and now appears neatly contained within it.  In early September, with GLD at $181.81 we, along with Dave Banister of Market Trend Forecasts, noted the probability of a pullback in price.

The first chart below is the weekly chart, showing the long-term channel.  The second chart is a daily chart showing golds recent spike and crash, putting it back within the channel:





The next indicator with predictability in supporting GLD's long-term trend are price levels.  These support levels are in green in the two charts above.  GLD is trading above one of those key levels at $154.  This price level will act as support but if violated becomes resistance.  Not shown in the chart above is the upside resistance level at around $164 - this price level will act as a level of resistance and if violated becomes support.

At a price of $157.77 (Thursday's close), GLD remains above support and is still actually in the top half of its channel. I think the most likely scenario is some further weakness and consolidation within its channel.

Additionally, the 40 week moving average (approximately equivalent to the 200 day moving average) is at $151.40 and is sloping up.  It has more or less hugged the bottom end of the channel since 2008.  This moving average could act as a third indicator of GLD's long-term trend. The 10 week and 40 week moving averages are shown in blue below:

iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageChina's Cunning Plan To Revive Growth

By now, we all know the story of China's troubles. China achieved its stunning growth through a combination read on...

article imageA Mild Improvement For The US Macro Trend In May… So Far

How’s that second-quarter rebound working out for the US? It’s still a shaky affair, but there are signs read on...

article imageThe Future Of Banking Is Now On Sale

The initial public offering class of 2014 was surely an elite group. 275 companies raised a combined $85 read on...

article imageTextbook Arc Rounded Reversal for High Flying Airlines

A beautiful chart pattern played out on two airline stocks – Southwest and United read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Gold: The Ultimate Store of Value?
More Articles on: Commodity



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.