Lights Out For The Shiny Metal

I had noted for a long time that the magic number for Gold (GLD) was 1550. Below that and the neutral trend from September 2011 would change to bearish. With several weeks below and no sign of a reversal how far can it go?

Lets take a closer look. Starting with the daily view one thing is clear: this is just horrible. The Price, Relative Strength Index (RSI) and Moving Average Convergence Divergence indicator (MACD) are all pointing lower. All of the Simple Moving Averages (SMA) are above and falling.

There is really nothing else to say about this view. But moving out to the weekly view is a lot more interesting. Here there is a consolidation at the 200 week SMA after the fall out of the neutral channel, until this week. A close at Wednesday’s levels sets off a hornets nest of bad news for Gold. There are many levels looking left that could become support either in the short term or longer, 1376, 1340, 1325 and 1260. But none particularly standout on this timeframe.


And the RSI, MACD and SMA all suggest lower as well. But it is the monthly chart that really set the ugly scene. This month is setting up to break the rising 8 year trend support. It is also ready to break below the 50 month SMA. The RSI is falling and just turning into bearish territory, so it has a lot of room to move lower. The MACD is moving lower but also has room to fall before reaching the levels of 2001 where this rally began. The 38.2% Fibonacci at 1286 might stop it but with this momentum it will have to prove that it does not want to fall all the way back to 893, the 61.8% retracement.

In short, this pullback might just be getting started. In any event the trend is now firmly lower and and any long play is counter trend and dangerous.

Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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