GLD (Gold etf) is now trading slightly below the bottom of the contracting price channel on the weekly time frame which was recently discussed as my preferred buy point. In the previous update on Thursday, I had stated that the optimal scenario in GLD would be to see an intra-week break of that descending support line, followed by an end-of-week (Friday) close back on or above that trendline.
As such, there are a couple of ways to play this, assuming one is considering a long position in gold. The more aggressive approach would be to establish an initial position here (GLD is currently trading at 106.26), only adding to that position on strength, i.e.- above your entry price & if/when GLD reclaims the bottom of that weekly pattern. The more conventional & conservative (yet still fairly aggressive, as gold is a counter-trend trade) would be to wait for some decent technical evidence of a reversal in gold. Doing so would involve watching GLD over the next week or so, looking for signs of a reversal such as a high-volume sell-off followed by a bullish candlestick reversal pattern on the weekly time frame.
So far today, the volume on GLD has been well above average, however, it is too early to say how much more selling is likely to follow before gold starts to move higher. Even then, once the current selling ends, will gold just bounce or are we at or close to a more lasting bottom? Again, there just isn't any technical evidence on the chart at this point to do anything but speculate on where & when the bottom in gold will come. With that being said, I made a case in the recent video analysis of gold for an objective long entry at or near the bottom of this descending price channel on the weekly chart and as such, I figured that it was worth pointing out today's price action in the shiny metal.
GLD will likely be added as an official long trade idea if & when we get some evidence that a bottom may be forming or put in place. At that point, suggested stops & price targets will be provided. As of now, GLD is only an unofficial trade idea & should be considered a highly aggressive, counter-trend trade.