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.

GLD_2_Feb_2015

SLV_2_Feb_2015

 

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.

GDX_2_Feb_2015

SIL_2_Feb_2015

 

Courtesy of StockCharts.com.

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