Gold … Read Between The Lines

Are Bulls, Really In Charge?

The usual suspects, ‘geopolitical tensions‘, are being trotted out as the reason for gold’s latest breakout move.

Junior Miners GDXJ, have pushed past the trendline highlighted in the last report, negating the ‘short-squeeze’ analysis … for now.

So, gold’s up, markets are down, and bonds are up … all in an apparent ‘flight to safety’.

To the casual observer, it might look like pandemonium.

Let’s step back and let the price action speak for itself. However, we’re going to approach it differently this time.

The charts below of GLD, show a trend-line study that’s unbiased … the lines are there. We’ll let them tell us what’s the next likely outcome.

Gold (GLD) Weekly Chart:

First, clean and un-marked

The objective is to look at this price action and see if there are relationships not immediately discernable.

How about this one:

Looks like there’s some type of ‘axis’ trend line.

Price action’s been oscillating around this line for about two years.

What about this one:

Let’s take that last trend line and see if there’s a trading channel of some type:

Ruh, Roh Scooby … looks like there might be trouble ahead for the rabid bulls; at least temporarily.

How about putting the first axis line back in and see what we have:

Zoom in on the ‘confluence’ area below.

Valid Or Not

The big question is, if these lines are ‘in effect’.

That is, we’ll have to watch subsequent price action to see if the market’s respecting these lines … enough to precipitate a reversal.

This week’s action in GLD, has pushed past established resistance from mid-November, last year.

Doing so, has put GLD in Up-Thrust (potential reversal) position.

Momentum indicators, MACD, monthly, weekly and daily, are pointing higher.

Summary:

We’re between resistance and momentum.

Opposing forces.

Let’s throw in, major indices had their all-time highs between November last year, and January, this year; excluding biotech IBB, which peaked way back in August.

Mining sectors GDX and GDXJ, are a whole other story … their all-time highs were long ago; back in 2010 – 2011.

At the close, GDX is near up-thrust and GDXJ, is already in up-thrust position. We’ll cover that in a subsequent update.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

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