GLD got down to the lowest support line I had drawn on the chart years ago. This would be a very good place to bottom. I have seen very little mention of gold lately. It seems like the bear market has worn most traders out. This seems like a reasonable sentiment condition to make a long lasting bottom.
This looks like a classic accumulation type basing structure. The break down a few days ago took out all the stops from weak longs. The recovery back into the base sets the stage for a rally. Its too soon to tell if this is the final bottom, but this is a very pretty looking bottom pattern. I would expect some more chopping around. Making a bottom does not mean going right into a strong uptrend. If one wanted to invest in gold stocks for a long term position the risk reward here is very good. One could start scaling in with a stop below the recent low. If I am right about this being a bottoming pattern GDX will not see that low any time soon.
I have no idea if gold will resume its bull market and head back to the 2011 high or not. It seems due for a bull market even if it ends up making a lower high. That could easily cause GDX to double from here.
Bob
No comments:
Post a Comment