Gold’s Sharp Rebound Could Indicate A Throwback

The first chart below shows the Gold SPDR (GLD) with a breakout in the 119-120 area in mid January. Even though I think the long-term trend is down, this breakout is a positive development medium-term. GLD fell back last week with a sharp decline on Thursday, but rebounded right away on Friday. This sharp rebound indicates that the decline might be a “throwback” to broken resistance, which turns support. The red lines mark a Raff Regression Channel to define the six day downswing. A follow through move above 124is needed to end this pullback and signal a continuation higher. The second chart shows the Silver ETF (SLV) testing the breakout zone in the 16.5 area.




The third chart shows the Gold Miners ETF (GDX) springing to life with a successful support test in the 17 area and a break above the November high in January. The ETF has since consolidated above this breakout with a small correction that looks like a falling flag or wedge, which is a bullish continuation pattern. An upside break from this wedge would signal a continuation of the Dec-Jan advance. The indicator window shows the Gold Miners Bullish Percent Index ($BPGDM) surging to the 50% level and then stalling the last two weeks. A break above 50% would mean that over half of the stocks in GDX are on Point & Figure buy signals (double top breakouts).

The last chart shows the Silver Miners ETF (SIL) with a similar setup.




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