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Wednesday, May 9, 2012


Take a look at the GLD monthly chart.

The last few months price has been consolidating into a symmetrical triangle formation.  This kind of triangle has even odds of which direction it will break out of.  Price is at the bottom trend line and also the 18 SMA which should provide support.  The low of the month so far was 153.6 (horizontal green line).  Notice how that green line sits at the top of a peak back in 2011.  That peak could now be support.  So we have 3 different things that could provide support in this area.  The only negative I see on this chart is the last blue bar.  Notice the huge volume on that bar.  The lows of high volume up bars are usually strong support, but that support weakens every time it is tested.  Back in Dec. GLD closed below the low of that bar, then bounced back strongly.  However, here we are again under that low.  Check out the daily chart.

The daily chart shows extended price into potential support levels.  The odds of a snap back move are fairly high even if it does not last long.  There is also potential for this to be a significant low.  The risk is well defined with a stop a little below today's low.  If price gets back above the low of the high volume blue bar of (156.78) it would be a good sign of a possible longer term low.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.