The GLD ETF which closely tracks the gold price is showing a much needed strong reaction off of very key trading range support at the 129 level. The test of the 129 level was a very key test for the gold market as a break down through that level would have opened the door to possibly the 122 to 123 range.
But as of today’s tape action in the GLD ETF we see that it is reacting strongly to this trading range support level and the volume is very robust as well. There also exists an evolving bullish triple P in the MACD histogram which would be confirmed on a close above today’s high later this week.
This could imply that the gold price and the GLD ETF wants to trade higher again back to the top of the swing trading range near the 139 level. 129 to 139 is a nice trading range to work with on this ETF and both levels are now well defined enough that they are likely to offer strong support or resistance in the months ahead.
In the near term we need to see the GLD ETF close and trade above 132 as more confirmation that the near term down trend has ended. Assuming that can be achieved, it could open the door to 139 again.
The gold price has been in corrective mode since October 14, 2010, coming close to 3.5 months of sideways corrective price action. This sideways corrective shelf could potentially be constructive as cause and support for a new follow on leg higher some time later this year.
But in the near term the upside reaction today is very constructive and it will be interesting to see if the GLD can initiate a close above 132 in the days ahead as a means towards progressing back up to the 138 to 139 range.
I came up with exactly the same analysis and bought a starter position today. With dollar debasing and inflation, GLD is a good place to be. Just trading the long channel.
I am quite surprised by the weakness today in GLD. Caught me off guard. Seems like yesterday was a total head fake. We need to go up tomorrow in the GLD immediately otherwise this could be a break of support range.