The chart below is the GLD ETF weekly candle chart. According to technical analysis, gold is at an inflection point. This inflection point is a function of price being in-between the 50 and 100-simple moving average. Depending on your opinion of the 50-simple moving average, perhaps it can be ignored, for it is a short-term indicator and averages after the 50 are considered to be longer-term, even with weekly candle bars.
Opinions aside, the GLD has absolutely respected the 100-simple moving average. In May 2012 until July 2012, there were a total of six touches between the GLD and the 100-simple moving average. As price consolidated, tension was built and the result was a 10% rally.
The GLD has touched the 100-simple moving average about three times as of late, the white oval in the chart. This may be the beginning of similar horizontal consolidation or the calm before the rally. To the contrary, the SLV ETF lost its 100-simple moving average and it is now about to start having a negative slope for the first time in about three years! Silver, however, still has the support of the 150-simple moving average and the futures curve in gold is still pointing towards $1800 gold in 2017, see the charts below for details.
Feel free to e-mail any comments, feedback, suggestions, or general inquiries to… Author salernoma@mx.lakeforest.edu
