GLD Gold ETF Chart – Bearish Technical Price Target Remains Below 100 US Dollar

by Olivier on April 27, 2015

Gold remains in a confirmed downtrend. Price action has been bearish for several years now and remains bearish. My job as a trader is to objectively analyze price action. I tune out all the noise and I don’t care about opinions. A year ago I did the following technical review of Gold – GLD ETF:

GLD – Gold ETF Descending Triangle Pattern

Let’s recap the current technical situation:

  • Dominant technical pattern is the double top with the reaction high being a lower high
  • Initial thrusting move to the downside in the 1st half of 2013
  • Bearish descending triangle pattern in the 2nd half of 2013 and 2014
  • Long-term weekly moving average 30 with a bearish downward slope
  • Resumption of the downtrend is about to start i.e. resumption of the trend leading into the consolidation pattern

Click on the weekly GLD chart to enlarge:

Gold GLD - Bearish Price Target

The main takeaways are the following:

  1. In downtrends you either short or you stand aside
  2. Calling tops or bottoms for that matter is a losing proposition

Conclusion: Talking of bottoms, the really important thing to keep in mind here is that there are no signs whatsoever of capitulation type volume. For a bottom to take shape we either need a very long basing pattern or market participants to throw in the towel. From a psychological perspective keep in mind the 100 US Dollar level is extremely important.

As you know, round numbers act as strong magnets attracting price. It is highly unlikely gold will touch and bounce exactly at the 100,00 level. Support is best thought of as a price area. Therefore odds are very high price will undercut that widely followed level in order to trigger panic selling. That is when we should see volume surge. As long as there is no washout and the downtrend continues to produce falling tops there is no reason to turn bullish.

Tyler Bollhorn - Trading Quote

The best traders are not afraid of holding on to strong stocks, they are afraid of holding on to losing stocks. – Tyler Bollhorn


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