Gold GLD Still Standing on Precipice of Chart Support
I wanted to give a quick chart-based update to my prior post this week “Key Daily and Weekly Price Level to Watch in Gold GLD” which goes into a bit more detail than this quick update.
It’s rare to have such a major commodity ‘hanging out’ at such a critical key level from the technical analysis perspective.
Let’s start with the Daily and move to the Weekly chart:
Cutting right to the chase, Gold – seen in its leading/popular ETF GLD above – broke under the critical 50 day EMA recently and today fell back under it after a sharp down-day yesterday.
It’s now at a critical support level which builds from the daily prior price level and lower Bollinger Band at $132 (and weekly EMA as we’ll soon see).
Going a step deeper than the price and EMAs (price is a more important technical factor than ANYTHING), we see an ominous negative divergence in both Volume and Momentum – not bullish.
So it’s all down to buyers for technical (chart) support at this level.
As I mentioned in the prior post, it’s neutral from the $130 level to $135; bullish (gold held support and ‘busted’ the divergences) above $136, and otherwise bearish for perhaps $125 under the $130 level.
The weekly chart gives a good perspective and also shows why $130 is important and why $125 is a potential chart target should sellers push price lower here.
We see the same structural negative volume and momentum divergences as non-confirmations, though price remains in an objective (undeniable) long-term uptrend (higher highs, higher lows and positively sloped EMAs).
The 20 week EMA (green) resides at $131, but let’s go ahead and call it $130 for good measure.
So, from an IF/THEN ‘price pathway’ perspective from the chart, a price breakdown under $130 targets the rising 50 week EMA at the $125 level ($123 currently).
Of course, a sudden bullish upsurgence in price negates these bearish signals, but it all comes down to how buyers and sellers interact at the critical $130/$132 level where we are now.
In gold (futures), the key level where we are now is actually $1,350 per ounce for the key daily level, then $1,300 for a subsequent “round number” level.
We’re still under both the 20 and 50 day EMAs on the daily chart ($1,384 and $1,375 respectively, as of this posting).
The weekly 20 EMA on gold prices to reference is $1,344, or just round it up to $1,350.
Keep watching these levels with extreme attention while we’re at them at the moment.
Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey,
Good post as usual. Question on how do you set the 3,10,0 settings on MACD. When I try those same settings on my TOS(ThinkorSwim) platform, I get nothing just blank. fast length = 3, slow length = 10 and macd length = 0 and averaget type 'EMA'.
Thanks Fibbtrader,
Hmm – it varies per platform, but what I've started doing is eliminating the 'signal' period in the standard MACD, though Linda Raschke (popularized the 3/10 Oscillator and from whom I learned it) uses settings 3, 10, 16.
Try 3, 10, 1 but the main idea is to look at the 3 and 10 period EMA differential.
Also, if possible, change the EMAs to SMAs in the MACD calculation (closer to the original oscillator).
Just a rookie here–the TRIX(5,9) looks almost identical to the MACD(3,10,0) in my eyes.