As most of you know, I like volatility and it contractions and expansions.
Here are two charts of GLD, the gold ETF. On both the weekly and daily charts, a large symmetrical triangle has been forming for several months. There has been two distinct lower highs--not good, while there was a creation of a double bottom, which is now being challenged. The 84-85 area is support at the 200 DSMA. If price breaks the 200, we are transitioning from a bull to a bear market and the drop to 78 should be quick. The weekly shows a similar view. Watch carefully over the next few days to see what happens--I will be.
Hi Grant,
ReplyDeleteI could not see much on the daily and then the weekly but when I went to the MONTHLY...WOW...It got interesting...Looks like it has got a ways to meander...but the potential for a big rally is shaping up...Looking at the monthly at the link below- what does that look like? I was thinking maybe it looks like the money supply! NOT GOOD!
http://i254.photobucket.com/albums/hh81/etfremd/GLDMONTHLY5_1_09.jpg
Good Trading,
Eric
Eric,
ReplyDeleteInteresting. However, when I step away from the various indicators, I see a large 1,2,3 Top forming on the monthly that most likely will reverse gold's rally from 2005. From the monthly 1,2,3, Top, I eventually look for a decline to around 65 on GLD. Of course, nothing happens until this symmetrical triangle is resolved. If price breaks out, most likely we test the highs. But the odds say that the top is in, and we break down. I plan on nothing until the triangle is broken on a move with volume.
Thanks for your comment.
Grant.
P.S. My experience with reverse SHS formations is that they rarely occur except at the bottom of a legendary decline. GLD is ending a multi-year bull run, rather than ending a multi-year bear run.