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Monday, December 24, 2012

GLD monthly chart

I was pondering the break down below the daily 200 SMA of GLD on heavy volume and I decided to peak at the monthly chart.  Here it is.

This chart really looks kind of like a top here.  In the 2008 correction, GLD closed below the 18 SMA similar to the current period.  After crossing back above that MA there was a high volume up bar that I circled.  In the current rally, GLD crossed above the 18 SMA and even closed higher on the next bar which should be confirmation of the resumption of the up trend.  However, there was no volume and now price is back below the 18 SMA again.  There is a real possibility that the very big green volume bar back in 2011 was a volume climax top.  The FED is doing unlimited QE which is supposed to be bullish fundamentally for gold.  So why does the chart look like this?  Was the big crash in the mining stocks really a sign there is going to be a big drop in the price of gold?  GLD broke the down trend line of the initial correction which should have brought in some buying volume.  It looked like it did on the daily chart, but it is not evident on the monthly chart.  Price tested the red resistance lines and turned back pretty sharply.  I think GLD needs to find some buyers very soon or it might end up testing that green support line again in the 148 area.  Should that line ever break, a drop back to 100 is not out of the question.


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