Yesterday we had a breakout above the symmetrical triangle in GLD. Today GLD gained even more, pushing up to what may be a head and shoulders neckline. Should it rise above 98.00, we may be seeing a buy signal of major proportions.
Let me step back a moment and say that in an earlier blog, I had mentioned the probability was good for a decline, or a false break, before the rally, "First the Pain, then the Gain." The market likes prove the majority of investors wrong and this time I was fooled. It isn't the last time this will happen. Knowing where to change my view of GLD is a real help in this case.
So now I want to caution investors. There are likely to be a few false moves here, as well. Knowing where to put a stop loss is still a good idea until we have an actual neckline breakout. After the breakout, there will still be plenty of profit potential, since GLD has a
minimum target of 129-130.00, once the neckline is breached.
For you Elliott Wave afficionados, this move is a potential wave 3 or C. It appears that this wave may be extended. In other words, a potential "melt-up"may be ahead of us. The reason? A look at the Shanghai index shows a monthly decline of 24% at Tuesday"s low. It appears that much of the buying is coming from Asia, beginning with the Bank of China.
Good luck and good trading!
Tony
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