Yesterday gold snapped any thoughts of consolidation doldrums and broke out. Big time. As in, new 5-year highs.
But while multi-year highs are nice, we trade in the here-and-now, and shorter-term charts are more useful for managing trades in the present. So let’s look at the 6-month chart of GLD, the unleveraged ETF for gold that trades on US markets.
It’s not hard to see yesterday’s breakout. What’s more problematic is drawing appropriate lines to indicate support and resistance. Oftentimes there are several choices for support and resistance lines, which is why some charts looks like a piece of abstract art, with lines going every which way.
Some in the media have been tempted to draw “pennant” lines that indicate a breakout yesterday. The problem with such lines is that the upper pennant line has to follow candle tops of the way down, not go from a top to a bottom. Drawn properly, choosing pennant lines would show the breakout happened last Thursday, not yesterday.
Now that’s not really a problem, it’s a choice – but then you would have had to call the breakout last Thursday. Monday is too late – the horse has left the barn, the trade is already gone.
Your friendly Gold Enthusiast sees the chart as having a pretty clear, gradual uptrend channel on the present-end. And yesterday broke out above that, around the 150.25 price.
That’s a… Continue reading at ETFDailyNews.com