Gold GLD and 3x NUGT Collapse from Daily Triangles

Oct 4, 2016: 11:26 AM CST

Gold collapsed this morning as price broke out of a triangle price pattern.

Today’s breakdown also sets in motion an official bearish (short-term) trend reversal lower.

How so?  Let’s plot the breakout first on Gold ETF GLD and then the hyper 3x leveraged bullish gold miners (stocks) NUGT.

Gold – seen above with the ETF GLD – formed a short-term triangle (trading range) from July to today.

A lack of volume and momentum set the stage for a possible bearish breakdown (breakout) which is what we’re seeing develop this morning.

Breakouts can be powerful, especially when we see them develop on higher volume – which appears to be the case this morning.

We’ll need to wait for the close to measure the full day’s volume but nonetheless, this is a significant move (down 3%).

The rising 200 day SMA on GLD is nearing $120 which could be a logical target.

If you find non-leveraged ETFs boring, then here’s your breakdown on powerful 3x Gold Miners NUGT:

Instead of a triangle at the top (like GLD), we see a clearer Symmetrical Triangle in the middle of the range for the miners.

Price compressed between the rising 200 day SMA at $18.00 and the falling 50 day EMA at $23.00.

Today gives us a breakout on higher volume which is right now over 35 million shares.

Only experienced/aggressive traders should use leveraged ETFs and should always read the information about how the fund is structured (and the risk).

Nevertheless, rapid profit awaits those brave enough to go beyond the standard ETF… but so do losses if handled incorrectly.

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Corey Rosenbloom, CMT

Afraid to Trade.com

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2 Comments

2 Responses to “Gold GLD and 3x NUGT Collapse from Daily Triangles”

  1. Intelligent Trend Follower Says:

    I’m glad to see you call this out Corey. The price action in gold today (especially the 3x ETFs) were crazy. Thanks for sharing your thoughts on these markets.

  2. Astle Says:

    Trading on Gold at present is very risky and we got to be very wise with how we go about handling things. I mostly prefer to keep myself away because of the risk factor and I prefer to go for long trades. It’s good opportunity to go long, but we just need to have strict money management in place and that’s exactly what I do with OctaFX broker using their 50% bonus on deposit scheme, it’s fascinating to say the least!