GLD daily March 6th
Today’s gap below dual-support levels (horizontal & ABW pattern) in GLD (gold etf) is most certainly bearish on face value. However, there are two potentially bullish takeaways from today’s price action:
- Gold has been notorious for false breakdowns lately and…
- As mentioned in the past, oversold readings typically precede rallies in GLD as highlighted by the white arrows on this chart.
Regarding the GDX/NUGT long trade, after hitting the first profit target last week, the suggested stop was raised to 20.00 in the previous update. GDX traded slightly below that level, by just 1 cent on Wednesday and 6 cents yesterday, and is now clearly trading below the 20.00 level. As such, GDX/DUST will be considered stopped out and moved to the Completed Trades category. If gold should go on to reverse soon, particularly with some very bullish price/candlestick action, I may add GDX and select miners back on as trade ideas.
One final point worth mentioning is that despite today’s bearish price action, as of now both GLD and GDX remain in intermediate-term uptrends since bottoming in early November with both making a series of higher lows (although the fact that both are trading below the December highs somewhat calls that uptrend into jeopardy as the most accurate definition of an uptrend is a series of higher highs and higher lows). With that being said, GLD is now close to challenging its early Jan lows while GDX still has a very comfortable margin above it’s previous reaction lows set back in December.
Bottom line: We have a mixed bag of bullish & bearish technicals on gold & the mining stocks lately and although I can make both a bullish and bearish case when viewing the long-term (weekly) charts, I continue to believe that the longer-term bullish case for both gold the mining sector still trumps the near-term bearish outlook.