Technical Picture on $GLD
Earlier this year GLD was consolidating in the upper third of its recent trading range. From the Daily Chart of GLD below we see that since April GLD has been selling off hard with the re-emergence of US Dollar strength.
That said, the breakout of the steep descending wedge right at key support is bullish. Trader’s wishing to go long $GLD can shoot against the recent low with a stop just below. Although they are not shown, even a modest 38.2% Fib retracement bounce measures to $122.00 and a 50% retrace is $123.36 near the 200ema.
I would use those 2 areas as initial targets.
Annotated Daily Chart on $GLD HERE
Gold Miners ( $GDX ) Technical Set up
The technical picture of the miners looks better than Gold.
Here’s what stands out to me.
- From the bottom-most panel; The miners have been outperforming Gold on a relative basis; There has also been an uptick in relative performance vs SPY
- PPO Momentum is showing a bullish cross just below the zero line. Would not take much to push this positive
- RSI has broken resistance to the upside
- The Demand index has gone green with a rising ADX just below 20.
Trade Set up
Before considering a long on GDX I want to see the following
- PPO cross 0 and break above downtrend resistance
- ADX cross 20
- Price clear $22.75 which is R1.
- If those 3 criteria are met, I’d feel comfortable getting long against $22.75
If the Dollar continues to be strong I think it might be tough for Gold and the Gold Miners to really crank up. If the Dollar falters over the summer, Gold and the Miners could see a nice rally.
Set some alarms for yourself for a head’s up if you are interested in the set ups on Gold and the Miners.
Annotated Daily Chart on $GDX HERE