Looking at the weekly GLD chart, you can see that after gold produced it's all time high in 2011, it entered a bear market that corrected until late 2015. Then, a wide V bottom was formed, and GLD has been rising out of the V ever since. In the most recent months, GLD has been forming a big , just below the breakout zone, around the 38.2% retrace. The fact that we've formed a just below that level, signals that gold is ready to blast off, and as of today, the is beginning to break out to the upside. We are now within striking distance of the breakout zone on the GLD chart, and it makes perfect sense, since there is growing pressure in the equity markets. Traders are moving into the safe haven, as the and fear begin to increase in the equity markets.
I want to draw your attention to the blue zone between the 382 and the 236. You can see that on the way up, the price action was rapid, and the move down was even more rapid. What that shows us, is that there isn't much support or resistance in this zone. So if/when the GLD breaks out into that area, it could produce a powerful rally higher, that causes the GLD to surge into the 236. The technical indications show that the gold market has formed a long term bottom, and a breakout above 130.35 should turn the afterburners on. If we do see a breakout above that level, I think that we could eventually get a retest of the all time high.
I don't generally focus too much on fundamentals, but there are fundamental reasons to be on gold right now. Treasury Secretary Mnuchin has recently expressed some hawkish views on the dollar, the yield curve is flattening, and the US equity markets are facing a major correction. Couple those things, with an evident trade war, which we appear to be engaging in, a global debt crisis, and increasing , and you have a recipe for higher gold prices. For now, let's watch this breakout above the , as we rally up to the breakout zone. This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media. Good luck trading everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
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