Gold & GLD Analysis

Gold and the correlated SPDR Gold Shares ETF (GLD) has sold off significantly the past two days.  Where does this sell-off leave us in the long-term trend?

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GLD is at a significant juncture  after today’s decline as indicated in the weekly chart below. Included on the chart is the long-term price channel which has been useful in tracking the upward trend of GLD the past three years. As I stated in late March when GLD  has broken the top of the channel, sharp pullbacks followed.  Approaches at or below the bottom of the channel have been followed by price rebounds.  Those breaks are highlighted in the white ovals:

Today’s close also puts us slightly below the 23.6% retracement level and we are also below the bottom of the price channel.  In the past we have also seen similar brief breaks below the channel and near key fibonacci levels (at the 50% and 61.8% retracement levels). These sell-offs were quickly followed by price rebounds.

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Confluence of patterns (where more than one pattern meets on a chart) are worthy of our attention. While today’s confluence is not exact, the proximity of the channel and fibonacci level makes the remainder of this week worth our attention.

There is no way to know how long this price channel pattern will continue (nothing lasts forever), so proper risk management is always the first priority. Failure to hold the 23.6% fibonacci level and an inability to return to the price channel this week could mean further, swift declines.

For GLD longs, all is not doom and gloom since GLD is still in a long-term uptrend. The short and intermediate picture looks more uncertain but the next three days should give us some additional clues as to the next move.

2 thoughts on “Gold & GLD Analysis”

  1. I have been trading GLD since it started to fall from the high $170’s area. That goes back several months. My updated charts are telling me 155.90 is support with an inverted head and shoulders for the last 3 months. But also the fib numbers are and gann numbers are telling me of a major sell off this month. I see the 150 coming soon.

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